100 Percent Financing- What Is It Exactly
100 Percent financing means that all – or 100 percent of the purchase price of a home may be financed. 100 percent financing is also referred to as a zero down loan or zero down loan programs.
So 100 percent financing can be accomplished in one of two ways. It can be one loan that is the same as the purchase price or it can be two loans combined to equal 100 percent of the purchase price.
The Zero Down California™ program combines two loans. The first mortgage is an FHA loan that covers 96.5% of the loan amount. The FHA program offers more flexible lending guidelines than a traditional conventional mortgage. Credit score requirements are lower and allowable debt ratios are higher than with conventional financing. In this sense, more people may qualify for an FHA loan than a conventional loan.
The second mortgage is a 3.5% second. So when you combine the two, home buyers have 100 percent financing of the cost of the home. There are no maximum income restrictions on Zero Down California™ second mortgage program.
100 Percent financing covers the entire amount of the purchase price, but there are still closing costs involved in every transaction. You can ask a seller to contribute toward your closing costs to lower your out of pocket even further. You can also search the internet to find agents that will offer a home buyer rebate with a portion of their own commission to go toward your closing costs. There are many agents and companies out there that do just that.
Some home buyers have been able to purchase a home with no money down whatsoever by using a 100 percent financing program and by receiving closing cost assistance from either a seller or real estate agent.