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SUMMARY
Mortgage Down Payment
What Should YOU
Expect Here?
SUMMARY
Of This PAGE
Mortgage down payment – is a percentage of the purchase price homebuyers pay at closing.
It can be from own funds, a bone fide gift or a down payment assistance (DPA).
Percentage will vary: for FHA loans 3.5% to 10%; Conventional loans 5% to 20%.
In either case Less than 20% down requires mortgage insurance.
VA Loans and USDA Loans will be generated with ZERO down payment & no mortgage insurance
Mortgage Down Payment
Mortgage down payment – is a percentage of the purchase price – which the homebuyers are required to pay out front from their funds, at closing.
However, VA Loans and USDA Loans will be generated with ZERO down payment. It is NOT required.
The percentage can vary:
3.5% OR 10% for FHA loans
5% or 20% for Conventional Loans
It is weirdo but that is how it goes… no much incentives for anything in between!
3.5% Down Payment For FHA Mortgage Loans
Who is this program for?
FHA Mortgage Loan is a program designed to help low-to-mid-income (LMI) homebuyers as well as first time home buyers.
Often times FHA Loan borrowers are challenged by their low savings as well low credit scores
FHA Loans are designed to be lenient to these challenges
Home Purchase will be for primary residence
It will require a payment of (now set at) 1.75% of the loan amount, as an Upfront Fee Mortgage Insurance Premium (UFMIP) – which is wrapped into the loan
It also requires a “Mortgage Insurance Premium” (MIP),
which the homebuyer will carry for the life of the loan.55% Mortgage Insurance Premium (MIP) is also required.
The MIP is calculated on the amount of the loan per year.
The annual MIP amount is then divided by 12 and that resulting 1/12 amount is added to the mortgage month payment
will NOT be waived as long it is backed by FHA.
To remove the MIP, homeowner will have to make a refinance to a conventional loan.
Refi to a Conventional loan can be made at any time – proven that homebuyer qualifies for it.
However, it makes a certain sense when the home ‘loan to value’ (LTV) comes to 78% - with a combination of payments plus home value appreciation
FHA Loan With 10% Down Payment
Who is the FHA Loan With 10% Down Payment for?
This program is designed for homebuyers who have credit score between 579 and 500
Home Purchase will be for primary residence
And, can afford the higher 10% down payment
Which can come from their own funds, a bone fide gift, a down payment assistance (DPA) or any combination of the above
On the upside, this FHA program does allow for the Mortgage Interest Premium to be remove at some point, typically around +/- 80% of loan-to-value (LTV)
20% Conventional Mortgage Loan
20% Conventional - Hooray! No PMI nor MIP here!
Who is this program for?
20% Down Payment Conventional is designed for homebuyers with strong credit scores (typically in the 700s) as well as in the higher income bracket AND who have saved enough to put down a higher amount of the purchase price
Mortgage Lenders, Banks, Credit Unions or the government are NOT in the market to manage and transact homes
It is believed, and I think it is easy for to see, that with at least that 20% equity in the house, should homebuyer default on the loan, lender can foreclose on the property and resale it rather quickly for the other 80%
That’s one of the good reasons that ‘conventional mortgage loans’ are offered by a more widely base of lenders who generate more loans than all other mortgage types combined
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5% down for a “Conventional”
5% down for a “Conventional” with Private Mortgage Insurance (PMI)
Who is this program for?
Designed for all homebuyers with ‘good credit’ (620 FICO ® or higher)
Home Purchase will be for primary residence
There is NO Upfront fee - Hooray!!!
Mortgage insurance will be required. It is called Private Mortgage Insurance (PMI)
PMI is lower than the FHA’s Mortgage Insurance Premium (MIP)
PMI can be waived after borrower pays 20 to 22% of the loan amount
OR a combination with the home value increase
Actually, the program will already come with a target time when it should be cancelled!
Pretty sweet!
This is a relatively newer program: Not every lender will offer this program – Look for it!
Or contact me – see bottom below
ZERO Down Payment Mortgage Loans
There are two type of loans which do NOT require down payment:
VA loans
and USDA loans
…should you qualify for one of those
Down Payment Assistance (DPA)
And Home Grants
Down Payment Assistance (DPA) and Home Grants: are moneys which help those who will qualify – they are a valuable resource for low income and first-time buyer all over the Nation
Down Payment Assistance (DPAs) are made in the form of a “Second Mortgage.”
Which can be:
Active Second Mortgage
Silent Second Mortgage
Phase Out Second Mortgage
Active Second Mortgage – the homebuyer starts to pay it immediately along with the 1st position Mortgage
Some Down Payment Assistance (DPA) are made in the form of a “Silent Second Mortgage” – there is NO interest AND you do not make any payments on the principal at all as long as you own AND live in the house
. If house is sold and/or refinanced the total amount of the DPA is due at closing
Yet, there are other Down Payment Assistance programs that start to phase-out after a certain number of years – typically 3 to 5 years
Every year they phase out a certain percentage until the phase-out is ALL 100% complete. Then, then homebuyer will own that equity outright and don’t have to pay back ever …even if they sell the home.
Extremely sweet!
Grants - by definition are non-repayable
DPAs Are Available In ALL 50 States
And Territories
Down Payment Assistance and Home Grants are available all throughout the USA – I have seen them in ALL 50 states and territories albeit some might be exhausted during course of the fiscal year …but most come back the following fiscal year
Is there anything you still need
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