100% Mortgage Financing

Down payments can be difficult to come up with. Sometimes, the only way one can live the dream of homeownership is through 100% mortgage financing. This article will provide you with the ins and outs of no down payment loans.

Many lenders are now offering 100% mortgage financing at near-market rates. This makes it possible for borrowers with no down payment, and possibly less than perfect credit, to obtain a mortgage loan.

How 100% Mortgage Financing Works

Nowadays, 100% mortgage financing is available to the average borrower. Though your credit can't be terrible, it can be far from perfect. When obtaining 100% mortgage financing you have two basic options available to you:

·    Private Mortgage Insurance. To protect themselves in the case of default, most lenders require borrowers participating in a 100% mortgage financing program to carry private mortgage insurance (PMI). This insurance varies in cost depending on the size of the mortgage loan, and must be carried until enough equity has built in the home or until you have proven that you can make payments in a timely manner.

·    80/20 Loans. If you want to avoid private mortgage insurance, but still qualify for 100% mortgage financing, an 80/20 loan is a good option. This mortgage loan allows you to take out two loans. The first covers 80% of the home's purchase price, and the second acts as a 20% down payment.

100% Mortgage Financing Risks

There are some risks associated with 100% mortgage financing. For example, when you don't put a down payment on a mortgage purchase, you typically have little to no equity. If housing values in the area decrease, you could end up owing more for your home than it is worth. As with any loan, you should consider the risks before making a final decision.