Why is 100% Financing So Hard To Find?

A little less than six months ago you could finance a home with no money down with few problems. Even if you had marginal credit, no assets, and a relatively soft employment history.

These days you’ll spend a lot of time shopping for 100% financing even if your the most well-qualified borrower out there. You may even fail to find one bank or lender willing to offer you financing without a down payment.

The reason is because many of the banks and mortgage lenders offering 100% financing were losing money when homeowner after homeowner failed to make the first payment, leaving the bank with the keys and a vacant property.

This scenario seemed to be so common that many banks and lenders offering 100% financing closed down, or simply withdrew the program to avoid shutting their doors.

It seems many homeowners were willing to buy properties with zero down in the hopes of turning a quick profit, but as home prices slid, borrowers simply walked away with little more than a credit ding.

Of course, 100% financing will come back, this time with higher interest rates and mortgage insurance that protects banks and lenders in the case of a default or foreclosure.

While it may not be as easy to qualify as its predecessor, it should stick around a bit longer with protections in place for the banks and lenders offering it.