Pros & Cons of 100% Financing

100% financing



You’re finally ready to buy your New Orleans home! Congrats! This is a huge step! You’re also likely wondering “How do I pay for this house?” Well, let’s discuss 100% financing.

We are going to set you up with one of our local lenders for you to talk about financing options. (You are allowed to work with whomever you choose, we just love keeping it local!) This lender will start spouting off different loan options and you might get a little confused. What is the best option for me?

The answer to that is – it depends! While 100% financing is a great option, it’s not always the one you should go for. Here’s why:


You need to sell in less than 5 years. 

If you don’t think you’re going to be in this home for more than 5 years, we may want to re-think 100% financing for you. It’s unlikely that you will acquire enough equity in your New Orleans house to pay off your mortgage and pay real estate commissions. Unless your neighborhood spikes in prices after you buy, you’re likely going to have to come to the closing table with money.


Can I just sell the house myself to save on the real estate commissions?

You sure can! But houses that are listed for sale by the owners directly, typically sell for far less than what a great real estate agent can get you!


You didn’t make extra payments

One extra payment (to principal only) can knock about 7 years off the life of your loan. Unless you’ve made extra payments, those first 5 years, you’ve been paying all interest. This doesn’t help your bottom line when trying to sell after only being in the home for 3 years.



Why should I use 100% financing then? 

Great question! We think it’s an amazing solution for people who don’t have a lot of cash on hand. 100% financing provides a great opportunity for you to get into a home without having the money to put down.

We know that this is the only way some of our clients can become homeowners. 

Just know when you use this option that you need to plan on staying in this home for 5 years and try to make at least one extra payment.


What are the 100% financing options? 

Currently, there is a rural development loan that offers full financing. This loan type is only available in Jefferson Parish on the Westbank, St. Bernard Parish, Plaquemines parish, and the Northshore.

There is also state bond money that can give you money towards a down payment. While this isn’t exactly 100% financing, we have used this loan type with clients before and they didn’t need to put any money down. This bond money is available in any parish.

VA loans (for veterans) are also 100% financing. If you’re moving in 4 years, let’s talk about what neighborhood might have the best resale.


No matter what loan type you use, make sure your New Orleans real estate agent knows what you need. It’s the best way for us to help you!


Ready to talk home buying? Drop your info below! We’ll be in touch shortly! 



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