3 Ways Other Than Cash You Can Use To Buy a House

Happy couple buying new home and receiving house keys form real estate agent.
Drazen Zigic / Getty Images/iStockphoto

Purchasing a home is a significant milestone, but not everyone has the means to pay in cash or qualify for a traditional mortgage. Fortunately, there are alternative methods to buy a house that can work for various financial situations. Exploring these options can open doors to homeownership that you might not have considered.

Exploring Alternatives To Cash for Home Buying

While cash and traditional mortgages are common paths to homeownership, they aren’t the only options available. For many prospective buyers, alternative methods of financing a home can be both practical and attainable. These alternatives offer flexibility and solutions for those facing financial constraints or credit challenges. Here are three alternatives that can help you buy a house, even without traditional means.

1. Rent-To-Own Agreements

Rent-to-own agreements are a unique blend of renting and buying. In this arrangement, you agree to rent the home for a set period, with the option to buy it before the lease expires. Part of your rent payments can go towards the down payment.

This method is ideal for those who need time to build credit or save for a down payment while locking in a purchase option.

2. Seller Financing

Seller financing, also known as owner financing, occurs when the seller of the home acts as the lender. Instead of getting a loan from a bank, you enter into an agreement with the seller to pay back the purchase price over time.

This option can be beneficial if you have trouble securing a traditional mortgage, as the terms can be more flexible and negotiable.

Investing for Everyone

3. Government-Backed Loans

While not entirely different from traditional mortgages, government-backed loans offer more lenient qualifying criteria. Programs like FHA loans, VA loans and USDA loans require lower down payments and have more flexible credit requirements.

These loans are especially helpful for first-time homebuyers or those with lower credit scores.

Final Take

Owning a home doesn’t always require cash upfront or a conventional mortgage. Alternative options like rent-to-own agreements, seller financing and government-backed loans provide different pathways to homeownership. Understanding and considering these alternatives can be your first step towards holding the keys to your new home.


Here are the answers to some of the most frequently asked questions about buying a house.
  • What is the most effective way to purchase a home?
    • The most effective way to purchase a home depends on individual financial circumstances. For many, obtaining a traditional mortgage with a good interest rate is effective, especially if they have a strong credit score and steady income. Exploring different mortgage options and shopping around for the best rates can lead to an effective home buying process.
  • What is the cheapest option for buying a house?
    • The cheapest option can vary, but government-backed loans, like FHA or VA loans, often offer lower down payments and are more accessible to first-time buyers or those with lower credit scores. Additionally, programs offering down payment assistance or first-time homebuyer grants can also reduce upfront costs.
  • What are creative ways to buy a house?
    • Creative ways to buy a house include:
      • Rent-to-own agreements -- where you rent a home with an option to buy
      • Seller financing -- where the home seller provides the loan
      • House hacking -- where you buy a property with multiple units and rent out the others to cover your mortgage
  • How do people finance houses?
    • Most people finance houses through mortgages obtained from banks, credit unions or mortgage lenders. There are various types of mortgages, including fixed-rate, adjustable-rate and government-backed loans. Others may use alternative financing methods such as seller financing or personal loans for smaller or less expensive properties.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.


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