Financing in Concord>Question Details

Caden, Home Buyer in Concord, CA

Can I get a conventional loan with 10%- 15% down?

Asked by Caden, Concord, CA Tue Dec 29, 2009

I missed out on two homes because the sellers did not meet FHA requirement of owning the property for 90 or more days. There were also homes that needed some work, but I was told by my agent in no way those homes could qualify for FHA. My mid FICO is 745. I have had a stable employment. I have 10%-15% down payment avalaible in cash and I am looking to buy a home in the low 300k to high 300k range. Is it possible for me to get a conventional loan with 10% down these days? My mortgage banker preappoved me for FHA and keeps pushing for FHA. So did a B of A mortgage person I talked to. Also what is the Debt-to-Income Ratio Limit for Conventional loans now?

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BEST ANSWER
The DTI for mortgage insurance is 41%, so that would be your biggest obstacle. You also need two months reserves. I'd be happy to talk to you and see if you preapprove for conventional financing with 10-15% down. Thanks, Brad Stoddard 510.316.7495.
1 vote Thank Flag Link Tue Dec 29, 2009
Hi Caden...

I was curious if you were still shopping for a home. Recently FHA has changed their guidelines to accept flipped properties under 90 days. So depending on the property you could use FHA OR if you go conventional on a flip you have to put down 20%.

There are many mortgage options available to you with your profile. Please feel free to contact me anytime if you have questions.

Best Regards,

Brian
0 votes Thank Flag Link Thu Feb 18, 2010
Caden,
It sounds like a conventional loan might be an option for you, plus it would make you more competitive in the market as so many people are using FHA. I would be happy to give you a couple of names of lenders if that would be helpful. I would suggest talking to a couple because they can offer different things. Also, let me know if you need any help finding a home. Feel free to search our site for up to date listings at http://www.jscarealty.com/home-search/. Best of luck!
Regards,

Erica

Erica Jones Starkey
Broker, Co-Founder
DRE# 01503540
JSCA Real Estate Group
Providing Superior Solutions for Your Individual Real Estate Needs
http://www.JSCArealty.com
office: 925.989.1613
fax: 925.905.2417
Web Reference: http://www.jscarealty.com
0 votes Thank Flag Link Mon Jan 4, 2010
Hi Caden. Reserves are calculated based on PITI plus your other debt, times two. There are other underwriting factors for PMI with conventional financing, but the DTI and reserves are the most common obstacles. I'd recommend you to talk to a lender who is familiar with PMI guidelines (if not me, then the other lenders that responded to his thread seem knowledgeable). Have a great new year, and happy house hunting!
0 votes Thank Flag Link Wed Dec 30, 2009
Thanks, everyone.

Brad:

41% DTI is actually higher than what I expected (36%). Can you tell me how the two month reserve is calculated? Just the monthly PITI multiplied by 2?

Thanks.
0 votes Thank Flag Link Tue Dec 29, 2009
You might also see if you can come up with any extra 5% down...then you'll have no PMI with conventional and higher DTI ratios allowed. You can also get a gift from a relative (you only need to have 5% of your own money down for conventional).
0 votes Thank Flag Link Tue Dec 29, 2009
The 90 day no flip rule is big right now because there is a big trend with investors buying foreclosed properties at trustee sales and then immediately putting them on the market for sale (sometimes they fix them up, sometimes not). Even some conventional lenders impose the 90 day flip rule, but there are some that do not.

As Brad said your biggest hurdle will be the debt-to-income (DTI) ratio for <20% down conventional is 41%, FHA can go up to 55%. Take you total new PITI housing payment + any debt that shows up on your credit report (car loan, student loan, min monthly credit card payments) and divide into your gross monthly income to get your DTI
0 votes Thank Flag Link Tue Dec 29, 2009
Hi Caden,
The description of your situation is one we come across on a regular basis. The answer to your question is yes there is financing available with a conforming/conventional loan. Loans meeting the standard conforming guidelines still qualify for 90% financing. Not every lender has it but it is available and we currently have it. Feel free to contact me for further details if you'd like.
Happy Holidays,

Otis Clay
NoJa Mortgage Corp.
408-392-2323
888-880-6652 x 700
oclay@nojamortgage.com
0 votes Thank Flag Link Tue Dec 29, 2009
Sounds like a conventional loan is an option. Be firm with your agent and have him get you pre approved for both an FHA an conventional with PMI. You will need a full 10% down for the conventional loan. As for the 90 days some conventional lender have put a 120 day time frame on the ownership by private owners. The 90 days will be the shorter time line soon. Good Luck.
0 votes Thank Flag Link Tue Dec 29, 2009
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