100% FHA Loans: A Zero Down Payment Solution for Homebuyers

For homebuyers without savings for a traditional down payment, 100% FHA loans provide a fantastic opportunity to purchase a home with no money down. Unlike the standard FHA loan requiring a 3.5% down payment, these programs allow buyers to finance the entire purchase price and, in some cases, even cover some closing costs.

How Do 100% FHA Loans Work?

Instead of a single mortgage covering 96.5% of the home’s value, these loans are structured with a first and second mortgage. The options for the second mortgage vary, including:

• A 10-year repayable loan.
• A deferred-payment loan that accrues interest over time.
• A second mortgage covers 5% of the purchase price, which can help offset closing costs.

With proper structuring, a homebuyer can enter a new home with zero out-of-pocket costs - provided seller credits or lender assistance covers the remaining closing costs.

The Trade-Offs: Understanding Interest Rates

While the ability to buy a home with no money down is a huge advantage, there are some trade-offs to consider:

• The interest rate on the first mortgage is typically up to 1% higher than a standard FHA loan.
• The second mortgage rate is usually 2% higher than the first mortgage.

Because of this, some buyers who have the 3.5% down should use that for the down and get the seller to pay closing costs. I know this is not the preferred way to do it, but nothing easy or without risk is ever worth it!

Some Parameters to 100% FHA Loans?

These loans are ideal for:

• Buyers who have no savings for a down payment.
• No income limits on this product!
• Those who need help with closing costs.
• Homebuyers with at least a 620 credit score.
• Buyers purchasing homes up to $1.25 million.
• Buyers don’t necessarily have to be first-time buyers.

The Bottom Line

If a buyer can put 3.5% down, they will get a better deal with a standard FHA loan by securing a lower interest rate and using seller concessions for closing costs. However, for those who need a true zero-down-payment solution, 100% FHA loans provide an excellent opportunity to achieve homeownership.

If you have a cash-strapped client, one of these loan options, or want to discuss the best strategy for your situation, reach out today!

Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away.

📞 Cell: 661-714-6258

TEXT: 661-714-6258

📞 Office: 661-260-2970 ext. 2222

📞 Direct Line: 661-291-2222

📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

Rates got better yesterday and got hammered today. Stocks seemingly get hammered every day! Where is the relief? I don’t know yet, but I will let you know when I see it.

• We offer 12-day escrows for pre-approved buyers - Conventional/FHA/Jumbo/Bridge loans.
• We provide loans in all states, so call me with anything you need.
• Government Loans (FHA/VA/USDA) are in the 5’s and very low 6s.
• Conventional loans up to $806,500 are in the low to mid 6s.
• High Balance Loans from $806,501 to $1,209,750 are also in the low to mid 6’s.
• Jumbo loans above $1,209,750 are in the 6’s.
• Bank statement loans are available with 10% down again, with larger down payments in the 6’s.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No Ratio Loans require 30% down.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

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The full state of California naughty list has been added to MikeMeena.com! See the link below:

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Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.

📞 Cell: 661-714-6258

TEXT: 661-714-6258

📞 Office: 661-260-2970 ext. 2222

📞 Direct Line: 661-291-2222

📧 Email: Mike@AugustaFinancial.com

Have a great day, and an even better tomorrow! Please call me when you have a client who needs to borrow!