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Michaelabram's Blog

By Michael Abram | Mortgage Broker
or Lender in Los Angeles, CA

Changes in FHA Lead to Alternative First Time Home Buyer Programs


Hello,

With FHA changing their PMI guidelines on 4/1/13, it might be time to consider an alternative loan programs in the market place for first time home buyers.  With that said, there is a unique conventional loan in the market place right now that is very competitive to FHA loans.  Some of the unique features of this loan include:

  • 95% financing -- 5% down payment
  • No PMI on the loan
  • 30 Year Fix & 15 Year Fix Options Available
  • For a condominium, no HOA documentation is required except the master insurance policy
  • Minimum 620 fico score requirement


To compare, take a look at a scenario on the purchase of a house where a conventional loan amount is $200,000 and an FHA loan where the base loan amount is $200,000 (total loan amount $203,500).

Conventional, 5% Down Option


30-yr Fix Loan Amount % Rate Years Mortgage
0 Points  $   200,000.00 4.000% 30 $954.83
PMI  $    -         $0.00
Mortgage  $   200,000.00     $954.83


FHA, 3.5% Down Option (new PMI 1.35% factored in)

30-yr Fix Loan Amount % Rate Years Mortgage
0 Points  $   203,500.11 3.500% 30 $913.81
PMI     30  $   225.00
Mortgage  $   203,500.11      $   1,138.81


***Rates are subject to change, this is meant to be a comparison of a program with PMI versus no PMI.

Not only can you qualify with a lower fico score (FHA is 640), but you are saving an estimated $183.98/month on principal & interest for the loan.  It is a great alternative to FHA.


There are a few guidelines a buyer must follow to qualify for this particular loan, which would be either one of the following:

1. The borrower must make less than or equal to the income limit set by the investor for a particular county (ex. San Francisco County is $123,600).

2. The subject property is in an approved census tract for the investor.


Either way, you're looking at a great new program to drive more buyers into the market that may not be interested in paying PMI on a loan.  For further questions, please feel free to give me a call or email.

Michael Abram
RPM | Los Angeles
Direct: (310) 574-7766
Cell: (310) 995-0975
mabram@rpm-mtg.com
www.rpm-mtg.com/mabram

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