Reply
Contributor
Phitor
Posts: 120
Registered: ‎07-01-2011
0

Conventional loan with less than 20% down?

I will be applying in April, with a middle score somewhere around 780, and I was planning on putting about 14-15% down. However, in reading various sources, and in talking to a couple of realtors recently, they indicated that if you aren't able to put 20% down, your only options are VA (N/A to me), USDA (not sure if available in my area), or FHA.

 

Is this true, or are their still some lenders that offer conventional loans with less than 20% down? Can anyone share any recent experiences with this? Thanks...

Established Contributor
namvet
Posts: 866
Registered: ‎09-22-2011
0

Re: Conventional loan with less than 20% down?


Phitor wrote:

I will be applying in April, with a middle score somewhere around 780, and I was planning on putting about 14-15% down. However, in reading various sources, and in talking to a couple of realtors recently, they indicated that if you aren't able to put 20% down, your only options are VA (N/A to me), USDA (not sure if available in my area), or FHA.

 

Is this true, or are their still some lenders that offer conventional loans with less than 20% down? Can anyone share any recent experiences with this? Thanks...

 I would listen to your realtors advise.  A few years ago you get a loan with 0 down on conventional.   

 
New Member
xxxgeloxxx
Posts: 2
Registered: ‎02-27-2012
0

Re: Conventional loan with less than 20% down?

Congratulations in saving 15%. It's not east to save that much money now. How much house are you planning to buy. If you can wait, try to save the 20% DP. If not, there's an option of 15 years mortgage FHA, at least 10% DP and no PMI. but if you are looking for 30 years mortgage, you might be out of luck. Some credit union offers that but you need to get 5% second mortgage to qualify for conventional loan.

Regular Contributor
ReBuildingAgn
Posts: 193
Registered: ‎08-01-2008
0

Re: Conventional loan with less than 20% down?

I would check local banks in your area. Some banks (especially CU's) have programs that offer conventional loans with less than 20% down. BB&T has a program called CHIP that offers 100% financing and no PMI. There are income requirements however. Good luck!

;Starting Score: Low 500s FICO Aug 2008
Current Score: EQ 668 EX 723 TU 723 (All FICO)
Goal Score: 720s Across the Board! Almost there!

Cap1 NHR ($1250), GE Rooms2Go ($4k), WalMart Discover ($3250), Barclay's Rewards MC ($2k), Amex BCE ($5K), Kohl's ($1K), Chase Freedom ($3K), Discover More ($1K)
Contributor
Phitor
Posts: 120
Registered: ‎07-01-2011
0

Re: Conventional loan with less than 20% down?


xxxgeloxxx wrote:

Congratulations in saving 15%. It's not east to save that much money now. How much house are you planning to buy. If you can wait, try to save the 20% DP. If not, there's an option of 15 years mortgage FHA, at least 10% DP and no PMI. but if you are looking for 30 years mortgage, you might be out of luck. Some credit union offers that but you need to get 5% second mortgage to qualify for conventional loan.


As we haven't selected a property yet, we are estimating to put about $52k down on a $360k house. Actual amounts may vary slightly, but not drastically. We could afford to put the whole 20% down, but I'd like to reserve some savings for emergencies going forward. I did the math, and a 15 year loan, even with lower interest, will increase the projected monthly payment by 40%, which won't really work for us. We also don't want to wait another year, as the home prices and interest rates are not guaranteed to remain this low, especially in the area we are looking, which wasn't necessarily hit all that hard by this crisis.

 

For the general advice to check out various options and credit unions, I will definitely do this. In the end, 14% down on an FHA loan (under FHA limit in that area) would work, just wanted to have as many options as possible when the time came.

Established Member
HappyAFWife
Posts: 23
Registered: ‎07-03-2011
0

Re: Conventional loan with less than 20% down?

[ Edited ]
We have had no trouble finding multiple lenders willing to give us a conventional loan putting 5% down on a $350,000 house. (Our DTI is well below the cut offs and our scores are in the mid 700s with absolutely nothing negative reported.) We decided to use a chunk of our savings to do an upfront mortgage insurance premium payment when we close to avoid the monthly PMI rather than adding it to the down payment amount. Since we plan to stay in the house 10 to 15 years it will save us money in the long run.
New Contributor
anh2lua
Posts: 64
Registered: ‎06-22-2011
0

Re: Conventional loan with less than 20% down?


HappyAFWife wrote:
We have had no trouble finding multiple lenders willing to give us a conventional loan putting 5% down on a $350,000 house. (Our DTI is well below the cut offs and our scores are in the mid 700s with absolutely nothing negative reported.) We decided to use a chunk of our savings to do an upfront mortgage insurance premium payment when we close to avoid the monthly PMI rather than adding it to the down payment amount. Since we plan to stay in the house 10 to 15 years it will save us money in the long run.

This is exactly what I am going through right now.  I found a house (approved short sale) listed for 285k, I offer 290k, seller credit 3% toward closing cost.  I don't want to touch my 401k, so, my LO suggested that I put down 10% and pay upfront PMI (estimated $4500); no repayment penalty.  I think this is better than borrowing from my 401k to make a 20% down payment.

 

BTW, I had a short sale completed two years ago.

FICO scores Experian: 693; Equifax: 656; TransUnion: 707

Goal: 700+ on at least two reports
New Visitor
MntBound
Posts: 1
Registered: ‎02-04-2013
0

Re: Conventional loan with less than 20% down?

We also went thru Short Sale 2 yrs ago (March 2011) but have been told by every lender we have contacted that we have to wait 3 yrs for FHA financing and we can get Conventional financing but we must have 20% down or 80% LTV.  How did you find your lender?

Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
0

Re: Conventional loan with less than 20% down?

Everyone i have talked offers conventional at 5 percent down and some will do 3 percent down.

Valued Contributor
JM-AM
Posts: 3,303
Registered: ‎06-09-2010
0

Re: Conventional loan with less than 20% down?

While its true you should still be able to find a lender to approve you, its getting harder and harder.

What was approvable yesterday may not be approvable today. This is the biggest factor that many forget.
Good Luck
May all your dreams and wishes become a reality!

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+