Where are these people getting 5% down conventional loans?

[Swapmeet]

I talked to a mortgage broker today who said that in order to get a 5% down conventional loan, I would have to agree to live in it for at least 1-3 years or something like that. And she said that they will check. I told her that I didn't want to have to guarantee that--especially since I do intend on renting it in the not-too-distant future.

[TropicalSerenade]

I just found these boards a few weeks ago and didn't know 5% down was an option, either. We're closing on our house in 2 weeks and we got a 30 yr conventional with 5% down through our local credit union. They have been amazing and FAST. We've been sitting on our full approval for a month (came to an accepted offer in March but the sellers asked for a June close date). 

[webhopper]

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@Swapmeet wrote:

I talked to a mortgage broker today who said that in order to get a 5% down conventional loan, I would have to agree to live in it for at least 1-3 years or something like that. And she said that they will check. I told her that I didn't want to have to guarantee that--especially since I do intend on renting it in the not-too-distant future.

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I picked up an investment property using FHA mortgage in 2008....  the requirement was to live in it for one year.  I ended up living in it until 2011... so 3 years.

I think this is just to keep people from using loans that are designed for owner occupants towards investment property.

Lucky for me, NFCU does investment property loans, so if I want to pick up another house in the future, I'll go that route and have the larger downpayment, but hopefully the mortgage will report to business credit instead of personal credit.

[tooleman694]

The 3 - 5 percent conventional mortgages have been around for a long time.

Used to be called flex 97, now its just part of the guidelines.

[frugalQ]

I believe at one point Fannie/Freddie stopped backing 3% loans.  Now, this year, Fannie (not Freddie) has begun backing them again.  I believe it's called Conventional-97 loans.  There's a lot of information about them...just google conventional 97.

[tooleman694]

Im pretty sure they have always been around, it was just a different product.

They got rid of the product and just merged it in.

[jadeite788]

I know for a fact that my credit union offers 5% down on conventional loans.  But i think the interest rate is higher though.

[jadeite788]

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@Swapmeet wrote:

I am having a hard time locating a mortgage that will allow such a low down payment that is not FHA. So, is there a particular bank that people are going through or what?

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I know for a fact that my credit union offers 5% down on conventional loans.  But i think the interest rate is higher though.

[Swapmeet]

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@webhopper wrote:

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@Swapmeet wrote:

I talked to a mortgage broker today who said that in order to get a 5% down conventional loan, I would have to agree to live in it for at least 1-3 years or something like that. And she said that they will check. I told her that I didn't want to have to guarantee that--especially since I do intend on renting it in the not-too-distant future.

---

I picked up an investment property using FHA mortgage in 2008....  the requirement was to live in it for one year.  I ended up living in it until 2011... so 3 years.

I think this is just to keep people from using loans that are designed for owner occupants towards investment property.

Lucky for me, NFCU does investment property loans, so if I want to pick up another house in the future, I'll go that route and have the larger downpayment, but hopefully the mortgage will report to business credit instead of personal credit.

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Thank you web, this was helpful. I have looked into going with an investment property loan, but I don't like the 20% down and higher interest rates. I guess if everyone got what they wanted, then life would kind of suck.

[Swapmeet]

I turned a loan application in today....so I can kiss this silver spade goodbye as soon as my mortgage broker calls me later this afternoon.