100% Financing: Mortgages Without a Down Payment

by Amy Lillard

(UPDATED: February 7, 20224) In the real estate boom in the 1990s and early 2000s, consumers could often find extremely flexible mortgage arrangements. Some borrowers even obtained complete, 100 percent financing for their home. But the days of no down payments seemed long gone during the recent recession and economic turmoil, when lenders tightened their lending standards and required much more of borrowers.

Today, most borrowers are expected to put down money towards their mortgage. However, there are a few programs for special populations that still provide 100 percent financing.

USDA Rural Housing Loans

The U.S. Department of Agriculture offers 100 percent financing through it’s Rural Development Single Family Housing Loan Guarantee Program. And it applies to more than just farms. The USDA defines “rural” in ways that mean many suburban and exurban neighborhoods across the country can qualify for these loans.

To qualify for these loans, borrowers must buy a home in a qualified USDA area (determined by census tract density) and meet income eligibility requirements (household income may not exceed 115 percent of the area’s median income). In exchange, borrowers can obtain a 30-year fixed-rate loan with no down payment. A two percent mortgage insurance fee will be charged, which can be added to the loan amount at closing.

VA Loans

Veterans Affairs (formerly the Veterans Administration) provides a program that guarantees 100% financed mortgages for qualified veterans.

These loans are provided free of mortgage insurance, but borrowers must pay a funding fee. This typically ranges between 2.15 and 3.3 percent, depending on where the veteran served and if they’ve received loans in the past. The fee can be rolled into the total loan amount.

Navy Federal Loans

The Navy Federal Credit Union offers 100 percent financing to qualified members of the military, civilian employees of the military, the U.S. Department of Defense, and family members. The program is very similar to that offered by the VA. However, the fee charged is slightly lower, at 1.75 percent of the loan.

(Feb 6, 2024) The above article provides a comprehensive overview of 100% financing options available through various programs like USDA Rural Housing Loans, VA Loans, and Navy Federal Loans. Overall, the information is accurate but could benefit from a few updates and clarifications to reflect current practices and to ensure clarity for readers:

USDA Rural Housing Loans: Potential borrowers should check the USDA website or consult with a loan specialist for the most current income eligibility requirements and geographic definitions of "rural" areas, as these can change.
VA Loans: It's crucial for potential borrowers to verify the current rates directly with the VA, as these fees can vary based on the veteran's service and whether it's a first-time or subsequent use of the VA loan benefit.
Navy Federal Loans: The specific fee mentioned, 1.75%, should be verified for accuracy, as fees and requirements may have been updated.
Clarification on Mortgage Insurance: For USDA loans, it's beneficial to clarify that the mentioned "two percent mortgage insurance fee" is an upfront guarantee fee, and there's also an annual fee, which is calculated annually and paid monthly.
General Update: Given the article's date (7/15/2013), readers are advised to check for any changes in program details, as government programs and financial products are subject to updates and modifications over time.

To improve clarity and provide readers with the most up-to-date information, it's recommended to direct them to the official websites of the USDA, VA, and Navy Federal Credit Union for the latest on loan qualifications, fees, and other critical details.