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100% Purchase Loans

There are loans available with no down payment, which means you would take out a 100% loan. These loans are usually done with a 1st trust mortgage for 75% or 80% of the sales price, and combined with a 2nd trust mortgage for 20% pr 25% of the sales price. The banks do charge a premium on the interest rates since there is no down payment which creates a higher risk for the bank. You may pay a 0.25% to 0.50% premium on the 1st trust interest rate, and as much as a 1.0-2.0% premium on the 2nd trust interest rate. However, since the 2nd trust is a much smaller part of the loan structure, the higher interest rate premium does not cost as much as you might think.

You have to have a higher credit score for a loan with no down payment than you would for a loan with a down payment. And although there is no down payment required, you will be required to show ?cash reserves? (at least two months of your total monthly payment) to show that you have some cash on hand for emergencies. Most banks will allow a 401k, IRA, TSP and other types of retirement accounts to be considered as cash reserves, as well as checking accounts, savings accounts, stocks, etc.

If you have no liquid cash or very little liquid cash this is a good loan to consider. And this loan usually has no PMI (Private Mortgage Insurance). An example is below: