I am a first time home buyer and was recently told that if I put less than 20% down i would not qualify for a conventional loan and would have to go with an FHA therefore requiring PMI. I have a very good credit rating and was just curious if this was indeed the case.
Portage,MI | Sep 25th 2009
by stephpa...
Answer
by James M...
That is simply not true. Conforming loans (Fannie Mae/Freddie Mac) will allow as little as 5% down payment, depending on your qualifications and the location of the home you want to purchase. There will however be a requirement for Private Mortgage Insurance (PMI) on the loan, as opposed to the FHA mortgage insurance. The best advise is to compare the two options side by side, and then choose which works best for you. Sep 25th 2009
by Rate1st...
No, that is not true. You can do conventional financing as long as you put 10%+ down. If you have good credit scores, over 720, I would look at doing conventional financing to avoid the FHA upfront mortgage insurance fee of 1.75% of the loan amount. Regardless of FHA or Conventional, you would obviously have the monthly mortgage insurance. I'd like to speak with you in more detail about the options you have. - Brock R. Hicks, C.M.P.S. / Financial Planner / Loan Specialist - Toll Free: 1-877-RATE-1ST Direct: 949-287-4058 Sep 25th 2009
That was not the correct answer. Conventional programs allow up to 95% financing, FHA 97.5%. So youcan choose either of the two programs assuming yourcredit is stron enough. This means you can put down as little as 3.5% - 5% depending on which program bes suits you.www.mortgagesfirst.comfinance@mortgagesfirst.com Sep 25th 2009
by ryan@in...
Let me fill in a couple gaps here for you. The amount of down payment that you have does not dictate what type of program that you "qualify" for. That is dependent on a myriad of factors, of which down payment is only one factor. With less than 20% down, the ONLY way to avoid mortgage insurance (Called PMI on conventional loans) is to take out a 1st mortgage for 80% of the purchase price, and a 2nd mortgage for the remainder. You will be hard pressed to find a 2nd mortgage for more than 10%, however, so you should plan on having at least 10% down if you wish to avoid mortgage insurance. As is the case with any loan decision, you should map out the cost/payment/etc. for each option to determine what makes the most sense for your particular situation. Sep 25th 2009 |
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