Down payment need for a Conventional Loan?
I used to think you have to put 20% down to have a conventional loan.
With some smaller regional banks you do because their shareholders require it.
20% down is not required to have a PMI (private mortgage insurance) payment through your loan.
Mortgage Banks have more flexibility:
There’s a first time home buyer 3% down Conventional with a mid score of 700+, Less Debt to Income Ratio’s required . At least one buyer has to take an online class $110 on average.
Keep in mind buyers will have a higher PMI with less down. Also buyers with lower credit scores have higher Mortgage Insurance per month too.
If you don’t fall into these categories… First time, Low DTI, 680+ credit score…
Then 5% down conventional is your next step with less PMI but still PMI. Big thing- Scores mean a lot with rates and Mortgage Insurance payments!
Buyers can put down as much as they are able to, to lower that PMI or more buyers refinance once the value of the home goes up and the amount owed goes down.( < 80% Loan to Value) You can also reach out to your lender to remove the PMI. Sometimes the lender has you provide a CMA from your agent, but most likely they have you pay $100 for a brokers price opinion or $500 for an appraisal. Look at your statement. If your PMI payment is $50… you’ll get that money back in 2 payments.
FHA Loan is 3.5%+ down. This program is terrific for first time buyer’s that need that little help getting into a home for the first time.
It has PMI and higher debt to income ratio so more buyers buy FHA.
FHA also offers down payment assistance. It comes at a higher rate and the down payment isn’t free money (it’s a hidden lien on the home that only needs to be paid off when paying off the home, refinancing or selling the property).
Finally, USDA– no down payment required , only in rural areas designated by USDA, only brand new mobile homes, lower debt to income ratios, everyone living in the home over 18 must supply their income, and median income limits apply. Less buyers qualify for this for sure.
Reach out to me for more tips on lending and real-estate. Or apply online LoansByChrisKnox.com
Blue Summit Realty