Then best way to get 100% financing today is through a Fannie Mae-insured loan. This is still readily available even today.
The loan limit is $417,000 and you simply have to prove the income necessary to qualify. The credit standards are not very high and you need minimal reserves in many cases.
However, in an announcement made this week, this is going to change for many borrowers.
When you get a Fannie Mae-approval, as a lender, it comes in one of four levels, depending on the risk of the loan.
1) Accept
2) Expanded I
3) Expanded II
4) Expanded III
Today, you can get 100% financing on all levels of approval.
Sure, the rates are different based on risk, and the mortgage insurance is higher, but it still exists. The rates are very reasonable compared to where subprime used to be.
This will soon change. At least they are giving ample notice compared to the lending guideline changes of the last seven months.
In their most recent announcement, Fannie has declared that as of October 20, 2007, any loan getting an Expanded 2 or an Expanded 3 approval will be ineligible for 100% financing.
Expanded II's will be limited to 97% financing a Expanded III's limited to 95%.
In addition, each will come with new pricing adjustments, which will mean much higher rates for these products.
This means if you have buyers who have less than perfect credit, with no money to put down, but pretty good income, and they are sitting on the sidelines "waiting" to see what happens, their ship may be passing by in the middle of October.
It's a good time to contact them and let them know. Very soon, its very likely, for many homebuyers, 100% financing options will soon be over.
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