100% financing is still alive today.  If you have good credit, good income and are purchasing a home you are going to live in, there is a good chance of a loan being available to fit your needs.  You generally need to stay under the conforming loan amount, $417,000 today, potentially in the process of being raised to just under $730,000, at least temporarily.  Good news for aspiring homeowners, feel free to contact me if you would like to explore these options.

Investment property financing to 100% is a bit more tricky.  Most conventional lenders are not lending 100% on investment properties today.  In order to obtain this type of financing, you need to look outside the box.  Hard money is a very good option, even if you have excellent credit.  It is possibly the only option today.  There are a few ways to structure your deal that will enable you to obtain a purchase money loan with no down payment.

The first option is to look at a cross collateralization.  Cross collateralization is the process of encumbering multiple properties to secure the loan.  For this to work, you must own other property, and you must have equity in that property.  Instead of putting money down, you pledge that other property and a blanket lien is recorded.  You do not have to refinance your other property, if you have loans against it, they are not impacted, the lien is recorded subordinate to that existing financing.  But what if you don’t have other property, or the other property you own does not have enough equity in it?

Option number two is to look at a seller carry back.  A seller carry back is where the seller, instead of taking the full purchase price, agrees to hold a loan for a portion of the balance.  For example, if you are buying a property for $100,000, and the seller is willing to carry back $40,000, you would take a first loan out of $60,000 in first position, the seller holds a loan for you at $40,000 in second position and you own the property.  One of the benefits of a seller carry back is that you can often negotiate pretty good terms.  I’ve seen seller carry backs that call for interest to accrue, but not be due, until the term of the loan is up.  Many different options to explore if you have a seller willing to work with you.

A third option is a hard money rehab loan.  If you are buying properties under market value and rehabbing them to sell, this is a decent option.  If you are buying bank owned properties, you are not going to get a seller carry back.  There are rehab loans available that will finance up to 100% of the purchase, plus up to 75% of the after rehab value.  They typically have a 6 month term, roll all the fees and interest into the loan and have no prepayment penalty.  You also will typically get those first 6 months payment free, as the payments are written into the loan amount.  These loans are more expensive than conventional financing, but allow you to buy, rehab and sell a home using other people’s money.  The requirements on these loans are more stringent than most other hard money loans, you need a credit score in the high 600’s, and need to have liquid assets available, typically $20k for every $100k you want to borrow.  You can go to this link to find out more about these rehab loans.

Those are the best ways to finance an investment property with no money down.  I hear rumors of some private investors willing to lend based on the appraised value, but I don’t know anyone actually funding those types of transactions at this point in time with the down real estate market.  If you know of someone actually lending in this manner, please drop me a line, I would be curious to know who they are.

I will end this with another option for acquiring property with no money down.  These days, with the foreclosure problems, some investors are able to take a property subject to the existing financing.  This could be a good option, you would need to bring that financing current and service it, but if you find a situation where you can acquire a property subject to the existing financing, that is a pretty good way to get in.

Hopefully this has been informative, please come back often.  Good luck in your endeavors!