In 1997, when I entered the financing world, I was awed by the availability of 100% financing. It was such a recent development in the mortgage industry that not many lenders were making it available. However, as time went on and competition became fierce, more and more banks and lenders made 100% financing available to the masses.
Not that long ago, 100% financing was available on an investment property with no income verification. Can you believe that? It amazed me how easy money was to obtain AND how little was needed to risk. Banks loosened their requirements to the point that not even work verification was needed. However, the bubble burst on such loans and many banks and financing institutions withdrew all of their 100% financing options. As many of you know, many of these banks and mortgage companies have closed their doors.
FHA, our government backed loan, followed suit and withdrew the availability of “seller assisted” down payment. This means that using the existing equity of a home for the required 3% down payment is not an option anymore. They even changed their required down payment from 3% to 3.5% effective January 1st 2009. This means that a borrower of an FHA loan will need more money out of pocket. This is good in many ways as it lowers the high risk these loans have fallen subject to.
Is there still a loan out there for those of us who need to buy and don’t have a down payment? YES, here is a list of 100% loans available today:
- FHA: This 97% LTV (Loan To Value) government backed loan will allow a borrower to finance up to 100% CLTV (Combined Loan To Value) of the purchase price IF the borrower can obtain the remaining 3% from another source. This is a great loan and has incredible rates. It’s 100% for those that can obtain a gift or a second loan from family, employer, church, etc. They allow energy-efficient upgrades above the sales price.
- Utah Housing: This is an FHA hybrid that allows first time home buyers to purchase a home in Utah using up to 103% of the purchase price. It’s technically an FHA loan up to the 97% and a concurrent 2nd mortgage is added for the remainder. This loan is incredible, it allows a qualifying borrower (some restrictions apply) to get into a home with no down payment.
- Conventional 100%: This is a conventional type loan that allows borrowers access to 100% financing using a combination of a 1st and 2nd mortgage. This loan is a last resort option for those not qualifying for other 100% loans because the rates are a bit higher.
- USDA Rural Housing: This is a government loan used to develop rural areas of the community (Eagle Mountain, Saratoga Springs, etc.) and allows 100% financing with no mortgage insurance. Qualifying is easier, and with no mortgage insurance the payment stays low.
- VA: This loan is reserved for veterans and active duty military. Borrowers have access to 100% financing and no mortgage insurance. This is the best loan available today. The rates are low and qualifying is more generous. They even allow for energy-efficient upgrades over the sales price!
As you can see financing options are still available with little to no money down. Please call us at 801-266-2466 for a friendly no-obligation quote. We can quote you rates and fees right over the phone or have them sent directly to your e-mail.