If you are not going to go all the way and put 20% down, a 10% conventional loan is a real "sweet spot" in the mortgage market right now. Why do I think that? Because you are putting less than 10% down, but getting very low private mortgage insurance (PMI) rates.
10% down with PMI is a much better option than FHA if you can swing it. FHA just raised their mortgage insurance premiums and now they require 1.75% up front mortgage insurance and 1.25% monthly mortgage insurance. By comparision if you have good credit, 10% down conventional has NO up front mortgage insurance and as low as .44% monthly mortgage insurace. On a $350,000 FHA loan, you would have $6,125 up front mortgage insurance and $364 monthly mortgage insurance. With 10% a down conventional $350,000 loan you would have NO up front mortgage insurance and as low as $128/mo monthly mortgage insurance. Wow that's a huge difference isn't it!
Read more at:
10% down conventional loans can have tighter underwriting guidelines with regards to credit scores and debt-to-income ratios, this is why some borrowers will still go FHA.
I hope this helps you understand private mortgage insurance a little better and feel free to call me at 858-922-7899 or email me at email@example.com if you have any questions.
Sr. Loan Officer