Investing in Rental Property

100% Financing of Investment Property

Can you get 100% Mortgage Financing?

Is 100% financing of investment property still possible? 100% mortgage financing or no money down real estate loans are another name for the same idea. The answer is a resounding yes! But, it is not as simple as it was in the past 10 years to buy real estate with no money down.

During the 10 years prior to 2008 the politicians in Washington pushed banks to drop loan standards via the Community Reinvestment Act. Banks would offer 100% mortgage financing for borrowers often with less than stellar credit history. Typically, a no money down real estate loan might be an 80/20 loan. That is, one bank would offer to finance the first 80% of the mortgage. A second bank (or different division of the first bank) would offer to finance a second mortgage on the remaining 20% of the property value - thus 100% mortgage financing. The first and second mortgage had different underwriting standards and would be different interest rates. Thus you could get 100% financing on your home or investment property.

But the collapse of many sub-prime loans to speculators in 2008 forced the banks to abandon this practice. So many people with little cash available to purchase a house were left wondering how to buy investment properties with no money down.

The conventional wisdom is that now you have to save the 25-30% down payment before you purchase investment rental properties. This is certainly the wisest idea. It does take cash to own investment properties. But if you want to preserve your cash and use OPM (other peoples money) for the purchase there are still ways to achieve 100% financing of investment properties.

I discussed a variety of ways to obtain real estate loans here. When you need or want to purchase investment rental properties little or no money down, here are a number of ideas:

  • Use Seller Financing for either the first or second mortgage

  • If you use seller financing for the first mortgage, you can get the money for the balance from a variety of sources without questions

  • If you use seller financing for the second, banks could be more hesitant to lend - but it's worth a shot

  • Use Rent to Own Investing (or Lease Options) to control property

  • Find someone that has cash to buy the property and you find, purchase, renovate and manage it for a share of the ownership

  • Use private money to finance the property - search for people willing to give you loans from their self-directed IRA's

  • If you do not own a home you can still get 95% financing. After a year or more rent out your home and buy a new house

  • Get a conventional 75% loan from a bank and borrow the remainder from some other source - just make sure the money is in your account 2-3 months before you apply for the first mortgage

  • Buy real estate "subject to" the existing financing - if the seller is desperate enough, they could pay you to take over the note

  • Use hard money loans for financing investment properties - best used for quickly flipping real estate these loans can be used to fund the purchase and renovation costs.

There are many more creative real estate investing ideas that you can use for 100% financing of investment property.

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If you live in New Zealand, Abacus Finance can help with property finance. Our experienced Home Loans Team offers current mortgage rates and a range of options. Enquire Online for a no obligation mortgage loan enquiry.

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The materials contained on this website are provided for general information purposes only and do not constitute legal or other professional advice on any subject matter. does not accept any responsibility for any loss which may arise from reliance on information contained on this site.

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