100% Mortgage

(aka "No Money Down" Purchase)

No Down Payment loans "Just Ain't What They Used To Be".  This page is geared toward purchasing a new home.  Please also refer to two other pages on our website for more information:  Purchasing Your New Home and Tips for Purchasing Your New Home.  If you are considering a 100% refinance on your real estate, please refer to our Home Equity Loan page to see the options available for a second mortgage refinance (perhaps in conjunction with a first mortgage refinance).

The marketplace has changed drastically since March-April 2007.  Just as a refresher, until the end of 2006, a borrower had to have pretty decent credit with a 2-year job history, and with those two prerequisites in place, he/she could qualify for a first OR second home -- up to $1 million or more -- with no money down -- with stated income and sometimes even with no verfiication of assets.

No down payment loans still exist, but there are a lot stricter guidelines, and underwriting is going to be less likely to grant exceptions to the programs.  Stated income, 100% mortgages, may become a faint memory -- at least in this mortgage climate.  There is an ebb-and-flow to the mortgage industry, as there is with all businesses -- programs contract then later expand.  However, the "loosey-goosey", "breathe-and-cast-a-shadow" qualification process may never rise again to the pinnacle of the 2005-2006 mortgage rage. 

So, what types of loans are available in the "no money down" category?  

1. Fully documented income:  Fannie Mae & Freddie Mac still will allow a 100% mortgage with mortgage insurance.  Loan limits  to $417,000 (conforming loan limits).  Some programs may require a minimum investment of $500 of the borrower's own funds.
2. Fully documented income:  Jumbo mortgages in the range of $417,000 - $650,000 are generally underwritten in accordance with Fannie Mae/Freddie Mac guidelines.

3. 80/20 or 75/25 mortgage loans, avoiding mortgage insurance, are still available -- up to a loan amount of $650,000.  Until recently, lenders clamored to have both the 1st and 2nd mortgages placed with their companies.  Now, the lenders are saying "Yes, we can do the first mortgage, but you'll have to place the second mortgage with another lender".  Both mortgages will have a premium placed on the Combined Mortgage Loan-to-Value ("CLTV"), but the second mortgage rates are now especially higher priced on this type of loan program than previously.

A zero down loan is used when you don't have enough cash -- or you don't want to commit the cash -- to pay your closing costs and make a down payment on the purchase of your home.  Zero down programs allow you to buy your home now, instead of waiting to sell your current residence, or to save enough for a down payment.

There are several options available for buying a home with zero down.

1. Get one new loan at 100 percent loan-to-value (LTV). PMI is required (unless you pay an interest rate premium to avoid the PMI charges), but PMI charges are now tax deductible.
2. Get an 80% first loan and a 20% second (piggy-back or 80/20) loan. This program does not require PMI, and all interest is usually tax deductible (check with your tax advisor).
3. Get a new first loan and have the seller carry back a second loan for the balance of the purchase price.

One of the ways to minimize the borrower's out-of-pocket costs is to include Seller-Paid Closing Costs in their Offer to Purchase.  For more information on Seller-Paid Closing Costs, click here.

PMI is an additional charge you pay if you make less than a 20 percent down payment. This mortgage insurance policy protects the lender in the event of a payment default or foreclosure, and the loan is not paid off in full.  The PMI payment ranges from 0.19 percent for a fixed rate loan with a 15 percent down payment; up to 1.09 percent on a fixed rate with zero down; and as high as 1.34 percent on a zero down variable rate.

Of course, we ALWAYS encourage you to contact us electronically or call us for a no-obligation, no cost assessment of your purchase needs.