• A loan at 125% is a mortgage loan equal to 1.25 times the value of the property securing the loan.

  • Popular in the 1990s, 125% loans and similar loans became increasingly risky and unmanageable during the 2007-2008 housing bubble.
  • Due to the risk associated with the lender, 125% loans have significantly higher interest rates than traditional mortgages.
  • Loans at 125% are less common today, but still available from some lenders.