How to Buy a House with No Money

Buying a house with no money may sound impossible, but in certain situations, it is achievable through alternative financing methods, government schemes, or support from others. While a completely zero-cost home purchase is rare, it is possible to buy a property without using your own savings if you structure the purchase carefully. This is particularly relevant for first-time buyers, low-income households or those with family support.

In most property transactions, the buyer needs to provide a deposit, pay legal fees, cover stamp duty and arrange a mortgage. However, there are ways to minimise or eliminate these upfront costs by exploring options that reduce your personal financial contribution.

Using a No-Deposit Mortgage

Some lenders in the UK offer no-deposit mortgages, also known as 100% mortgages. These are typically only available in specific circumstances, such as guarantor mortgages, where a family member offers their own property or savings as security. The borrower gets a mortgage for the full property price without needing to provide a deposit.

One example is a family offset mortgage, where a relative places their savings in a linked account that the lender holds as security for a set number of years. If the borrower keeps up with repayments, the money is eventually returned. These mortgages are relatively rare and come with strict eligibility criteria, including stable income and good credit history.

Government Schemes for First-Time Buyers

Several government-backed schemes can reduce or eliminate the need for a deposit. The Shared Ownership scheme allows you to buy a portion of a property (usually 25 to 75 percent) and pay rent on the rest. Because you're buying a smaller share, the deposit and mortgage required are lower, and in some cases, housing associations allow buyers to proceed with minimal or no deposit.

The First Homes scheme offers newly built properties to local first-time buyers at a discount of 30 percent or more, making them more affordable and reducing the size of the deposit needed. While not a no-money option in the strictest sense, it can significantly reduce upfront costs.

Receiving a Gifted Deposit

Another common way to buy a house with no personal savings is to receive a gifted deposit from a parent or family member. Lenders allow this, provided the gift is unconditional and declared in writing. The donor must confirm they do not expect repayment and are not gaining any ownership rights.

Some lenders accept this arrangement even for the entire deposit amount, enabling the buyer to apply for a mortgage without using their own funds. However, you will still need to cover legal fees and other costs unless those are also gifted or loaned separately.

Buying Through Right to Buy or Right to Acquire

If you are a housing association or council tenant, the Right to Buy or Right to Acquire schemes allow you to purchase your current home at a significant discount. In some cases, the discount can cover the entire deposit and reduce the mortgage amount so much that little or no money is required upfront. You will still need to qualify for a mortgage and pay for legal work, but the cost of entry is much lower than on the open market.

Joint Ownership or Private Agreements

Some people purchase a home jointly with another party, such as a friend, relative or partner, where only one of them contributes the deposit. This can be done through a declaration of trust or legal agreement. While you may not provide funds yourself, you will still become a co-owner with responsibilities for the mortgage.

It is also possible to enter into a rent-to-own or lease option agreement with a property seller. These arrangements allow you to rent the home for a period with the option to buy later, sometimes using a portion of the rent as a credit toward the future purchase. These are complex and need careful legal advice but can provide a pathway to home ownership without immediate capital.

Professional Routes and Investment Options

Some professionals, such as property investors or developers, use bridging finance or joint venture agreements to buy property without using their own money. These involve borrowing short-term funds secured against other assets or partnering with someone who provides the capital in return for a share of profits. These strategies require experience, legal advice and careful risk management and are not usually suitable for first-time buyers.

The Realities of Buying with No Money

While it is possible to reduce your personal contribution to near zero, there are still unavoidable costs in most purchases. Legal fees, valuation fees, and moving costs must be covered somehow, whether by gifting, borrowing, or negotiating incentives. You should also be prepared for ongoing costs such as mortgage repayments, maintenance, insurance and council tax once the property is yours.

It is essential to approach any form of property purchase with a full understanding of the risks and responsibilities. Defaulting on a mortgage obtained with no deposit can quickly lead to negative equity, particularly if house prices fall. Always seek independent mortgage and legal advice before proceeding.

Conclusion

Buying a house with no money is not common, but it can be done under specific conditions. Whether through no-deposit mortgages, gifted funds, shared ownership, or government schemes, there are paths to home ownership that do not rely on personal savings. However, all options require careful planning, professional advice and a clear understanding of the long-term commitments involved.