100% Financing Home Loans
Many people say 100% financing is impossible. Well if you are a qualified veteran, it is possible to get a 100% financing VA loan. What does 100% financing mean? It means that the loan covers the total amount of the house price. In other words, no down payments. The reason why banks and other lenders require a down payment in the first place is because they want security and they want to be paid back for everything they lent out. Making that initial payment ensures that there is less of a chance the borrower will default on the loan. In fact, credit score is less of a risk determiner than a down payment is.
With so much risk, why would anyone offer a 100% financing on a mortgage? With some programs, the government will back the loan, kind of like insurance, and with the government’s support, the risk factor nearly disappears, making the lender much more comfortable giving the borrower 100% financing.
Programs with 100 Percent Financing
A few different available mortgage programs offer 100% financing home loans, but not many. The USDA home loan and VA loans rank at the top in popularity. The USDA loan was put in place to help develop rural areas, and the requirements for this loan are surprisingly lenient. To qualify for this, your house does have to be located in certain areas of the US. In addition to this, there are a few added fees tacked on in order to provide funding for others in the future. Even though they are added into the amount of the loan, these fees can add up over time and should be taken into account when considering the USDA home loan.
VA loans come with a few more perks than the USDA, making them a better option for financing at 100 percent. Beyond no required down payment, the borrower could ask the lender to pay closing costs on a VA loan. In this case, the buyer wouldn’t have to put any money down. That means no money out of pocket.
Several other things make the VA home loans unique and a preferable option over just about any other loan program you could find. These include no required PMI, lower VA home loan rates, and even a lower credit requirement. To qualify for the VA, you must be a veteran, an active service member, or the surviving spouse of a veteran who died from serving.
If you meet VA or USDA qualifications, take a look at their 100 mortgage financing deals. Having your house completely paid for can be super relieving, and this can also get you into your house faster if you just don’t have down payment money readily available—nobody wants to be homeless for a time, especially not because they can’t make that initial payment.
Drawbacks to Financing with No Money Down Home Loans
With no money down, you will have higher monthly payments. It’s not a lender thing; it’s just the way the math works.
If you can make a down payment, you probably should. The return investment is so much better and lenders will offer you lower rates. That doesn’t mean you must or should put as much money down as possible right off the bat. A protective financial bubble will be your best friend if and when unexpected trouble hits. Find the balance that works for you in your specific home buying situation. A loan officer or financial adviser will often give great advice for how much of your money should go where.
Taking out a loan should never be something you do blindly, but 100% financing home loans need a little bit of extra consideration. Luckily the VA puts in place so many protective factors that will support you, your house, and your lender so that you can easily afford your house and keep it for as long as you need.
- VA Home Loans
- VA Certificate of Eligibility
- 100% Financing
- VA Loan Process
- How Does a VA Loan Work?
- Minimum Credit Score for VA Loan
- VA Loan Rates Today
- VA Loan Eligibility
- VA Loan Limits
- VA Approved Condos
- VA Loan Requirements
- First-Time Home Buyer Loans
- VA Funding Fee
- How Much Are Closing Costs
- VA Loans FAQ