100% financing of a mortgage with bad credit can be almost as easy to get as if you have good credit. Subprime lenders are usually willing to offer full financing. In some cases, they will also wrap in the closing costs as part of the loan. You have a couple of loan options for financing your home purchase.

The Cost And Savings Of 100% Financing

100% financing can get you in a home with little to no closing costs. So instead of paying rent, you can be building up your homes equity. With no down payment, you can also spend your cash on moving expenses.

The drawbacks to full financing are higher interest rates and fees for this type of loan. Shopping around for financing packages can protect you from some of these loan costs.

With a subprime loan, you dont have to pay private mortgage insurance (PMI) that conventional loans require you to pay.

Financing Options 1 Or 2 Loans

You have two options for no down payment loans. The first is to work with a lender for one loan that covers the entire cost of the home. You can also find loans that include the closing costs, usually called 102% loans. With one loan, you will find higher rates and fees. However, you just have one company to deal with.

Another option is to finance your mortgage through two different companies. This spreads the risk around, so you qualify for lower rates. You can also close your first mortgage with a down payment, and then take out a home equity loan or line of credit to use the cash.

Planning For The Future

Financing your mortgage has to be based on your future home plans. With 100% financing, you need to plan on living there long enough to build up some equity to cover the initial loan costs. Otherwise, you could end up owing on a loan if the homes price depreciates or you took out loan of 102%. Fortunately, in most housing markets, you can reach this point in a year or less.

You can also plan on refinancing your mortgage when your credit improves. However, if you transition to a conventional loan, be prepared to pay for PMI if you dont have at least 20% equity built up.