Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant

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Low 3% Down Payments

            After a brief disappearance in the economic downturn, 3% down payment loan products are back. This is especially important to our first-time buyer market and our returning buyer who has had a 3 year or longer wait period after an adverse credit occurrence. This is a helpful product to get back into the home purchase arena.  Fannie Mae (FNMA) loans, conventional conforming products are now available. Check your local market for loan limits in high cost areas but for most of the country the loan limit for a FNMA loan is $453,100.

All loans will require private mortgage insurance (PMI). This expense may be less costly monthly for a borrower with a higher credit score than the mortgage insurance carried on a FHA loan that requires a 3.5% down payment. PMI also can be dropped at some point down the road when there is enough equity in the home versus FHA which will require life of loan mortgage insurance if a minimum down payment was made.

Additionally, there may be down payment assistance programs to help with the 3% down payment. There are separate guidelines for those products. Gifts from family members are also allowed on the FNMA conventional programs.

For more information on low down payment options, please contact me and we will discuss what will work for you.

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Talking Down Payment

There seems to be misunderstandings about what it takes in down payment to purchase a home. Well, I will give you valuable information. You can purchase a home with very little down payment and at times, no money down.  Down payments come in all sizes.

VA loans: If qualified for a VA loan you are eligible for a zero down payment loan. Determining this will be based on service time, discharge type and whether you have used your VA benefit before. VA loans are also available in higher loan balances which depend on location in the country. In the higher loan balances (JUMBO) you may receive better terms for down payment than what is available through other types of JUMBO financing.

FHA loans: The minimum required down payment is 3.5% for a typical FHA loan. Maximum loan amounts are determined by county. All FHA loans require mortgage insurance, so no matter how much you put down, you will have mortgage insurance in some amount for a specified time period.

CONVENTIONAL CONFORMING loans: Following Fannie Mae guidelines a 1st time home buyers can get in for as little as 3% down payment. The maximum loan amount in most markets is currently $453,100. Check your area for your maximum loan amount. Mortgage insurance most likely is required for loans that have a less than 20% down payment but there are many ways to handle how mortgage insurance is paid through the loan. What I mean is, it can be paid for in cash at closing so that it is not included in your monthly payment. It can be financed into the interest rate, or paid monthly or a sum can be paid for in cash and the balance paid monthly. Check with your lender what options are available to you.

There are a number of other types of programs, USDA, JUMBO Conventional, Down Payment Assistant Loans, RENOVATION Loans and lender PORTFOLIO products. Each have their own set of guidelines. If you have questions about what is available for your situation please let me know and leave a comment below.