When many first-time homebuyers hear the phrase “100% financing” or “no money down,” their first thought is: “Wow! I can get a house for free!” But here’s the reality: while 100% financing can be an incredible tool to help you purchase a home without a large down payment, it doesn’t mean you won’t have other costs to cover.
In today’s blog, we’ll break down what 100% financing really means, what it doesn’t cover, and how you can prepare to use it wisely.
What 100% Financing Really Means
With 100% financing, your lender covers the full purchase price of the home. For example, if you’re buying a home for $250,000, the lender finances all $250,000. You don’t have to bring a down payment.
This is great news if saving up for a down payment has been holding you back. But here’s where many buyers get confused: covering the purchase price is not the same thing as covering all of your homebuying expenses.
What 100% Financing Does Not Cover
Even with no down payment, you’ll still need money set aside for other parts of the homebuying process:
- Closing Costs – These include lender fees, title work, and more. Expect 2–5% of the home price.
- Prepaid Expenses – Property taxes, homeowners insurance, and sometimes prepaid interest.
- Appraisal and Inspection Fees – Typically $400–$1,000, often paid upfront.
- Moving and Immediate Expenses – Think movers, appliances, or repairs.
So while the loan covers the price of the house, these extra costs are still your responsibility.
Why 100% Financing Can Still Be a Great Option
Don’t let these extra costs discourage you. 100% financing offers huge benefits:
- You can buy a home sooner without saving a large down payment.
- You can start building equity right away instead of renting.
- Many programs are tailored for first-time buyers, veterans, or specific communities.
The key is knowing what to expect and preparing for it.
How to Prepare for 100% Financing the Smart Way
If you’re considering a no money down loan, here are a few smart steps to take:
- Budget for Closing Costs Early – Even if the seller helps, assume you’ll cover some portion.
- Build a Small Cushion – Aim for $1,500–$3,000 in savings for emergencies and move-in expenses.
- Research Assistance Programs – Some local grants or programs can help with closing costs.
- Work With the Right Professionals – Choose a lender and realtor who will explain everything clearly.
100% financing is an amazing tool, but it’s not a free house. You’ll still need to prepare for closing costs, prepaid expenses, and other out-of-pocket costs that come with buying and moving into a home.
The good news? With the right preparation and guidance, you can take advantage of 100% financing to make homeownership a reality sooner than you think.
Let’s talk! Click [here] to schedule your free discovery call and get clarity on whether 100% financing is the right path for you.
FTC Disclaimer: This is not a sponsored video or article. All opinions are genuinely my own. This post also contains affiliate links and I earn a small commission if you make a purchase after clicking on my links. It does not cost you any extra. Thank you for your continued support to keep the Bri Callis Blog going!
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