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What mortgage options are available if you want to put 3-5% down on a house?

Posted on September 10, 2013 by Ray Williams (NMLS #216267).

By now most people are well aware of FHA and that you can put down 3.5% with an FHA mortgage. Some have learned that the new FHA mortgage insurance policies are more expensive than in the past. This is not to say FHA is not a good option when you go to buy a home. Truth be told FHA loans have lower interest rates than Conventional loans do. But what other options exist if you want to leverage your money, or don’t have a boat load of money socked away for a down payment?

You currently can put down 3% on a Conventional mortgage as well. The tradeoff you will need to understand is the rate will be higher than a standard conforming Conventional mortgage interest rate. Also, the PMI (private mortgage insurance) will be more expensive as well. The reason, (FNMA) Conventional loans by default aren’t built to have a standard 3% down payment. Traditionally Conventional loans require 5% down. One important note, the 3% down allowance for Conventional loans is changing with the roll out of Fannie Mae’s Version 9.1, set to take effect as of November 16th, this year. Meaning, the 3% down (MyCommunity) mortgage option will be eliminated. So you will be back to the standard 5% down on Conventional mortgages.

One additional option out there is the 3% down with NO PMI loan that is available, and won’t be going away when FNMA changes their guidelines in 2 months. That is right, 3% down with NO PMI on the loan.

Of course my fellow Veterans can always look to put no money down, since they are Veterans and have eligibility for a VA loan.

There are so many options and variables it will make your head spin, so give a call and discuss your plans and goals ~

Ray Williams

Branch Manager / Summit Mortgage / Denver  303.779.0591 / rwilliams@summit-mortgage.com

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