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What Are 100% Mortgages?

These mortgage loans cover the entire cost of the purchase of the property. A few years ago they were very common and many people borrowed 100% of the price of the property exclusive of the closing costs. They were available on properties in which the appraised value of the property was far more than the selling price of the property. Other 100% mortgages occurred when their was sufficient income to offset the cost of the property when it was categorized as income property.

If there is another asset, such as marketable securities, then they can be used as collateral against the loan. Many brokerage firms that also handle mortgages as one of their many financial products have specialist that work with the borrower or client.

The main items to consider when trying to qualify for 100% financing is your credit history, the appraised value of the property, the negotiated price, the income requirements to repay the loan and additional assets that may be used as security.

The FHA and the VA have requirements that are as close to but not exactly 100% of the selling price. There are closing costs which can sometimes be included in the loan if there is enough value in the property. The points, if necessary, are used to buy down the interest rate. Depending upon the market conditions a point or 1% of the total loan will reduce the overall interest rate by 1/8. So if there is a 5% interest rate on a $100,000 loan, the borrower can buy down the interest to 4.75% by paying 2 points or 2% of the loan up front.