Are There One Hundred Percent Loans Available for Mortgage Financing?

Before we start discussing the answer to “Are There One Hundred Percent Loans Available for Mortgage Financing?”, it is but proper for us to define first what a one hundred percent loan is. To put it simply, a one hundred percent loan is a loan option in which lenders shoulder the entire in which borrowers do not have to pay down payments of any form. This allow lenders to give borrowers with a reliable and good credit score and history the opportunity to be given a mortgage loan with a minimal initial expenses. On the other hand, the lenders attract other customers through providing this loan product. They are able to draw people who are unable and unwilling to apply for a mortgage loan because of the lack of resources to pay a fixed amount for down payment. There are different forms of this type of loan option. Let us discuss each in the following sections.

80/20 Loan

An 80/20 loan involves two loans financing a purchasing for a property. The first loan serves to pay percent of the amount needed to finance the purchase. It is your first mortgage loan. Depending on your FICO score, it will be amortized with a fixed rate of interest. The second potion of the amount will be paid using your second loan. It works exactly as the first loan only with a higher interest rate. Its benefits include not having to pay any amount for down payment and a private mortgage interest or PMI.

100 Percent Loan with Private Mortgage Interest

A one hundred percent with a private mortgage interest is probably one of the common forms used in the market today. No down payment is required in this format. However, a private mortgage interest needs to be paid. The function of PMI is to protect the lender in the case that you are unable to pay for your loan and in cases of defaulting. Moreover, the amount to be paid is included in your monthly payment so you don’t have to worry about another different payable amount.

100 Percent Loan with Lender Paid Private Mortgage Interest

This format is a variation of the one hundred percent loan with private mortgage interest. Aside from not having any down payment to pay, you also don’t have to pay for a PMI. The lenders will shoulder this amount for you. However, it is very difficult to prove your eligibility for this type of loan option.

Generally, to be able to get a loan approved under these options it is recommended that you maintain your credit history clean and FICO scores up. Remember it is important to be able to find an option that fits your current financial status. Doing so allows you to find an option that will be easier for you to handle, manage and pay for.