100% Financing Home Loans
You may be thinking to yourself, who is even doing 100% Financing Home Loans? This type of loan can be called “No Money Down” home loans or perhaps “Zero Down” home loans. These loans are available; however, the qualifications to be eligible are quite stiff. If you are considering purchasing a home, you may be interested in these unique loans.
The number of lenders who are processing 100% Financing Home Loans are not as many as there once were. The lenders are being more particular about who they loan their money to. The stipulations for being able to even possibly qualify for zero down loans have become very stringent. However, if the applicant is able to show they are worthy then the lender is very likely to continue the process.
With the applicant not giving any money towards the purchase up front, the lender is basically footing the bill temporarily. Some of the criteria or guidelines that are being used to qualify are:
- good credit score of a minimum of 600
- the housing debt to income ratio must be 50% or less
- 2 year positive credit history which includes 3 lines of traditional credit
However, these may not be the only guidelines that a particular lender may be using. You would need to consult with your lender, or maybe multiple lenders, to see what the current criteria is and what their process is to apply for their 100% Financing Home Loans that are being offered. It is possible that the lender may not be offering zero down financing due to the housing status of your local area.
The biggest advantage to this type of loan is on the borrower’s side and they simply don’t have to come up with any money to purchase a home. The biggest disadvantage to the borrower is that it will take a number of years before they build up any equity in their home. The potential borrower should educate themselves on the current market and the loans that may be available to them.
When applying for 100% Financing Home Loans, be sure to understand the terms of the contract. Purchasing a home is not a small purchase and there may be penalties or other costs that could incur if the borrower doesn’t fulfill their financial obligations. Talk with a home loan specialist and get their perspective on the current market and what they require. In fact, talk to several just to be sure you have the best information possible.
If you still have questions after talking with a specialist, ask them to run the numbers for you to give you an idea of what the final numbers would be. This will give you an idea if you want to move forward and apply. Never be pressured into giving any personal information against your will. You are in charge and if you decide that purchasing at that time is completely your decision. 100% Financing Home Loans are being offered even when the housing market is at a low but the eligibility criteria may be steep.