Conventional 97% LTV mortgage lenders?

[Agent86]

Does anyone know of a list of lenders offering this new product? What are rates like, and how much are PMI premiums?

My wife and I have high FICO scores (790 and 820) but not a lot of cash on hand. If we could lock down a 97 ltv loan at about 4 percent, we'd be set, but nobody's website seems to admit that they offer it.

[frugalQ]

You can go to Fannie Mae website and get the list of approved PMI companies, then go to each of their websites and look at their rate cards. The rate card is a matrix of credit score and LTV.

There are only a handful of approved PMI companies.....5 or 6.

As far as interest rate goes, that will vary widely and based on lender pricing.

[Bowzer]

We are currently going through UW with our mortgage loan. We took the newly offered 96.5% LTV Conventional loan. Our LO changed us from FHA to this after showing how much we would save on closing cost and being able to drop PMI after mortgage got to 80%. I understand with fha it stays throughout the life of the loan. I listed a few of our terms and our locked in rate. Maybe this will help a little, this is my first mortgage so I'm new to this. Also, you might consider the fact that you have a whole lot better scores than we did so this should certainly help when it comes to locking in a rate. Lender: State Farm Bank Loan Amount: 140,000 Down payment: 3.5% Rate Lock: 4.125% Conventional 30yr Fixed PMI: $141.00 Monthly Mid Score Used: 656 Equifax Beacon 5.0

[Anonymous]

Bowser - you said you saved a lot on closing costs - can you give an estimate of what you paid in closing costs for your loan?  I'd like to go the Conventional 97 route as well!

Thanks for any information you can provide.

[Anonymous]

Just as an FYI, 97% Conventional is a very expensive option. Not only is there typically an adjustment to the interest rate for LTVs between 95.01 and 97, but the PMI is also much higher. With Radian (one of the most popular MI companies), PMI is 1.05% even if your credit score is 760 or above. Compare this with 0.54% on a 95% conventional, and 0.85% with an FHA loan.

Unless you absolutely know you will be staying in the property for a very long period of time (to take advantage of the PMI eventually dropping off), you may want to consider other options.

[Anonymous]

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@Bowzer wrote:

We are currently going through UW with our mortgage loan. We took the newly offered 96.5% LTV Conventional loan. Our LO changed us from FHA to this after showing how much we would save on closing cost and being able to drop PMI after mortgage got to 80%. I understand with fha it stays throughout the life of the loan. I listed a few of our terms and our locked in rate. Maybe this will help a little, this is my first mortgage so I'm new to this. Also, you might consider the fact that you have a whole lot better scores than we did so this should certainly help when it comes to locking in a rate. Lender: State Farm Bank Loan Amount: 140,000 Down payment: 3.5% Rate Lock: 4.125% Conventional 30yr Fixed PMI: $141.00 Monthly Mid Score Used: 656 Equifax Beacon 5.0

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Great example. If you would have gone FHA, your MI would have been $90/month (saving $51/months) and you probably would have saved an additional $20/month on the interest rate. That equates to a savings of $71/month or $852/year.

Based on an amortization schedule, you will reach 80% on a conventional loan at about 9 years. Over the first 9 years, you will save $7,668 with an FHA loan.

Once the MI drops off at 9 years, the $141 PMI drops off, the conventional loan will be $70/month better. It will take 110 months, or just over another 9 years to break even with a conventional. In your situation, if you stay in your home under 18 years, FHA is the better route. Over 18 years, and conventional is the way to go.

Note: In considering tax deductions, the breakeven point will likely be slightly sooner. My point remains the same though .

[Anonymous]

Does the conventional version have upfront mortgage insurance as well?

[Anonymous]

Thanks for the information dpeezy.  What is the minimum credit score for a 95 conventional loan?

[Anonymous]

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@Anonymous wrote:
Does the conventional version have upfront mortgage insurance as well?

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There is no required UFMIP like there is with an FHA loan. With a conventional loan, the borrower can choose to make a one-time, upfront MI payment instead of paying it monthly though. With FHA, you must pay the UFMIP and the monthly MI.

[Anonymous]

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@Anonymous wrote:

Thanks for the information dpeezy.  What is the minimum credit score for a 95 conventional loan?

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620 is the minimum required score if there are no lender overlays. Your interest rate would be close to 5% and your PMI would be ~1.15%. In other words, it would never make sense to go conventional with scores in that range.