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Listening to the news and reading the papers may invoke a variety of fears and anxiety when searching for financing for that perfect home.  Unfortunately, with all the questions revolving around which banks are solvent, what products are available, and daily changes in lending, there is inevitably misinformation that is reported to home buyers.  This purpose of this article is to dispel the "there is no more 100% financing myth".

Yes, it is true that many of the products that provided 100% financing in the past are no longer available.  But by design ,these types of programs that put borrowers in high rate risky loans should never been offered in the first place.  What has remained constant throughout time (in the good and the bad) has been two government programs that have consistently provided homeowners with solid, affordable financing towards purchasing and refinancing a home.  These programs are FHA and USDA.

First, is FHA. The positives that have arisen out of this tumultuous market is that borrowers have become more educated regarding what is available for financing. As I am writing this, I know that many of you are thinking that an FHA program requires that the borrower contribute 3% of their own funds.  The caveat of this, is there is many nonprofit down payment assistance programs that offer to "gift" the borrower the 3% down payment .  Therefore, when searching for the right financing, it is important to work with a knowledgeable lender that can provide a variety of financing. 

The second option for 100% financing that is available to clients is a USDA loan.  A USDA loan is a government loan that offers 100% financing without the use of a gift.  Additionally, another benefit to this loan when compared to an FHA loan, is a USDA loan does not require the borrower to pay monthly mortgage insurance.  Mortgage insurance is a monthly fee that is tacked on to the payment for all conventional and FHA loans that are over eighty percent loan to value.  This fee can costs the borrower thousands of dollars over the life of the loan.  There are income and geographic restrictions with this loan, so call our office to discuss the details of this loan.