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Regular Contributor
Posts: 132
Registered: ‎11-14-2011
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Mortgage with 5% down -- possible?

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I'm looking at a house that's on the market for $240,000 but I have only $10,000 or so in cash for a down payment. I can easily afford a 30-year mortgage of $230,000, but would a lender actually lend that much to me with less than a 5% down payment? I have a decent FICO (about 730) and make $90,000 a year. No debt except $15,000 in student loans.


Starting Score: 653 (11/1/2011 TransUnion)
Current Score: 719 (5/3/2012 TransUnion) 572 (3/21/2012 Equifax) 762 (4/14/12 VantageScore)
Goal Score: 700


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Valued Contributor
Posts: 2,300
Registered: ‎08-25-2011
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Re: Mortgage with 5% down -- possible?

Then go conventional, with your scores you can do 3 percent down.

Valued Member
Posts: 35
Registered: ‎08-30-2010
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Re: Mortgage with 5% down -- possible?

How you can go conventional with 3 percent?

I have about 4% saved and my mortgage broker claim that I can do only FHA; even though someone else told me about Conventional with 3%.

I earn bout 130 000; scores are 720+;....

September 2010: EQ 628, Trans 634, Expir. 641
November 2010: EQ 671, Trans 671, Expir 692
December 2010: EQ 682 Trans 672 , Expir 692
June 2011: EQ 685 Trans 688 Expir 708
Goal : 730
Valued Contributor
Posts: 3,302
Registered: ‎06-09-2010
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Re: Mortgage with 5% down -- possible?

Going Conventional is not always a savings. Lenders have tiers for rates. Top tier with most lenders is 740+ for conventional. 

 

There are also guidelines for lower down payments, and could possibly cost you In additional fees and or rates.

Good Luck
May all your dreams and wishes become a reality!
Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: Mortgage with 5% down -- possible?

Yep. +1. I am going through CHFA, our housing authority in our state and I am getting a zero down 1st/2nd mortgage at 4.125%. Less down, higher interest but with rates so low, it isn't too bad.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Regular Contributor
Posts: 132
Registered: ‎11-14-2011
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Re: Mortgage with 5% down -- possible?

thanks for the info. Would someone explain difference between conventional and FHA mortgages? I'm not real savvy here, as I hadn't expected to be in the market for a house so soon


Starting Score: 653 (11/1/2011 TransUnion)
Current Score: 719 (5/3/2012 TransUnion) 572 (3/21/2012 Equifax) 762 (4/14/12 VantageScore)
Goal Score: 700


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Valued Contributor
Posts: 3,302
Registered: ‎06-09-2010
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Re: Mortgage with 5% down -- possible?

First you have to know there are 2 types of conventional loans.

 

1- Conforming conventional loans: A conforming loan conforms to the regulations created by Fannie Mae and Freddie Mac. There is plenty of information to find regarding the regulations. Fannie Mae and Freddie Mac have also created the super conforming loan, exclusive to borrowers buying homes in counties with high home values. Also plenty of information can be found regarding this.

 

2- Nonconforming conventional loans: Borrowers who do not qualify for conforming loans for one reason or another may still aquire a nonconforming loan. Borrowers seek nonconforming loans because of credit requirements, higher loan limits, as examples. They usually have unfavorable interest rates, additional upfront money needed, and mandatory mortgage insurance.

 

Conventional loans are not guaranteed or insured by the Government. Conventional financing relies heavily on credit scoring for the best rate terms. While conventional loans usually require a 20% down payment to circumvent mortgage insurance, low down payments do exist and will have to pay private mortgage insurance.

 

FHA loans are insured by the Federal Housing Administration in order to enable lenders to offer consumers better deals such as low down payments, low closing cost, easier credit score qualifying. FHA loans must be provided by an FHA approved lender. FHA allows borrowers with no credit history, and or few credit problems to still qualify to buy a home.

 

Just a little reminding fact, even though FHA has minimum requirements, lenders have overlay requirements. Overlay requirements are for just about any loan program available. Example of an overlay requirement would be a higher credit score to qualify.

Good Luck
May all your dreams and wishes become a reality!
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