I have a few questions regarding conventional mortgage options with down payments of less than 20%. First, I suppose it will be easiest to explain our situation.
I am getting hitched in a few weeks, and initially we will be living in my current home. I bought the home using an FHA loan in 2008 with a small down payment. Having made no extra principal payments and also having recently refinanced to a lower rate, the balance on the loan is about $147K, and the value of the home is around $155K. Essentially, when we go to purchase our next home, I am expecting to break even on the house after factoring in likely realtor fees, closing costs. etc.
Our goal is to move into a bigger home in the next 2-5 years (the sooner, the better). After getting married, we will have the ability to save $3-4K per month towards a down payment on our next home. We expect to look at homes in the $300-$400K price range. Other than saving for the down payment, we should not have any issues obtaining a mortgage (i.e. excellent credit, enough income, minimal debts). Most of our other savings is tied up in a 401(k), and we would like to avoid borrowing against it for purposes of our down payment.
This all leads to my question: what options are out there for obtaining a mortgage with a down payment of under 20%? I realize PMI will be an issue, but will our ability to find a loan reside primarily with the lenders we select when loan shopping? Do piggyback, 80/10/10 loans, etc still exist? In our situation, where our savings is low but cash flow is good, it seems like these types of loans could make some sense?
Thanks for any advice you can provide!
