100% FINANCING
Purchase

A 100% financing mortgage loan is a type of home loan that allows a borrower to finance the entire purchase price of a home without making a down payment. In this arrangement, the lender provides the full loan amount, meaning the borrower does not need to pay the typical 3% to 20% down payment that most mortgages require. These types of loans are particularly appealing to first-time homebuyers or individuals who may have good credit but lack the savings for a substantial down payment.

There are specific programs that offer 100% financing, many of which are backed by government entities. For example, the U.S. Department of Veterans Affairs (VA) provides VA loans, which offer no down payment to eligible veterans, service members, and their families. Similarly, the U.S. Department of Agriculture (USDA) offers USDA Rural Development loans, which are designed for low-to-moderate-income homebuyers in designated rural areas. These programs are popular because they make homeownership more accessible for individuals who meet the eligibility criteria.

While 100% financing mortgages eliminate the need for a down payment, they often come with certain trade-offs. Borrowers may face higher interest rates or additional fees to offset the lender’s increased risk. Furthermore, private mortgage insurance (PMI) or other forms of mortgage insurance may be required until a certain percentage of the loan is paid off, adding to the monthly cost. Additionally, because the borrower has no equity in the home initially, they may be more vulnerable to market fluctuations, which could result in owing more than the home’s value if property values decline.