Home Buying in Bel Air>Question Details

Frank M, Home Buyer in Maryland

First time home buyer - looking to avoid PMI, but don't have 20% down.

Asked by Frank M, Maryland Wed Feb 20, 2013

I know to get a conventional loan you typically need 20% down and that anything less usually makes you have to get a FHA loan.I know to get a conventional loan you typically need 20% down and that anything less usually makes you have to get a FHA loan. I've also heard that PMI rates/terms are going to be going up in early May of 2013.

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I would recommend doing a little more shopping, maybe for a home in which you can put 20% on. Plus Conventional PMI whether it is monthly or upfront can be a real killer. The FHA will require an upfront premium along with monthly paid insurance (these rates are rising). Home values are going to rebound, purchase a home within your range and in a few years you may have yourself a great investment.
1 vote Thank Flag Link Tue Apr 2, 2013
Hi Frank,
With less than 20% down you can't eliminate PMI altogether, however if you have good credit scores we have options to greatly reduce your payments. FHA has become more costly in both up-front mortgage insurance AND monthly mortgage insurance (and it is going up again April 1st). So I would recommend going conventional if you can. It could save you thousands of dollars over the life of the loan.

On a conventional loan you can pay PMI monthly, entirely up front (we'll let you finance it into the loan amount if you like), or the lender can pay your PMI in exchange for a higher rate.

As an example, on a $260,000 home with 10% down payment and a 700 FICO score, your principal, interest, and PMI payments on the following loans could look something like this:

FHA - $1287/month
Conventional with monthly PMI - $1207/month
Conventional with PMI paid up-front - $1109/month

These are for illustrative purposes only, but if you'd like to go over specifics please feel free to email me and we can go over the finer points.

Tony
1 vote Thank Flag Link Thu Feb 21, 2013
Hey Frank,

I pulled some home inventory for you to view in the general Bel Air area based on the price range that you specified - these are all single family homes. Lots to choose from! Click or copy & paste the link below to view:

http://mrislistings.mris.com/DE.asp?k=1186485X1D6b&p=DE-…

Once you get your financing structure squared away, give me a call and I would be happy to take you out to view some inventory - my office is right in Bel Air. You stand to get a great deal on your first-time purchase!

Take Care.
1 vote Thank Flag Link Wed Feb 20, 2013
Frank

Actually the FHA rates will be going up in April of 2013 so best to jump on something now if possible. I work in bel air md so if you are close by give me a call when you are ready and we can sit down to discuss. Thanks
1 vote Thank Flag Link Wed Feb 20, 2013
100% USDA loans is a good option if you are located in an approved area. It does have PMI, but much less when compared to FHA loans.

USDA Mortgage Hub
100% USDA Rural Housing Loans
Serving all 50 states
Ph: 800-691-8826 (7 days a week)
http://www.UsdaMortgageHub.com
0 votes Thank Flag Link Wed Jan 6, 2016
HI Frank, I just obtained a conv fixed 30 yrs with a 5% down, however I have to pay MI until my LTV reaches 80%, but yes, you can have a conventional with 5% down, at least in my case 5% was the minimum required. Of course with a 20% down you get rid of MI!
0 votes Thank Flag Link Thu Jun 13, 2013
Thanks Jody! Great insight for the question that was asked. http://teamvitek.com/blog/2011/09/usda-loans-soon-to-have-mo…
0 votes Thank Flag Link Sun Mar 31, 2013
James - although that use to be true, USDA loans do now (close to 2 years) have PMI but it is much lower than FHA.
0 votes Thank Flag Link Sun Mar 31, 2013
Hey Frank! There is indeed a loan program that you have no monthyly MI. Matter of fact, two programs. If you are former military than a VA loan is the way to go for no PMI.

If not, then USDA has no PMI. The United States Department of Agriculture has started insuring loans with 0% down payment and no month. MI.

Shoot me an email at jim@thevurganovgroup.com to learn more.
0 votes Thank Flag Link Sun Mar 31, 2013
Hi Frank, Consult a mortgage lender.
0 votes Thank Flag Link Fri Feb 22, 2013
Hi Frank,

I'd recommend you speak with a good local lender. We use and have had great service from Pete O'Donnel at First Home Mortgage. A link to his site is attached. With all the mortgage defaults it is going to be hard to avoid PMI. However I believe only FHA is increasing PMI rates in May. Have your individual qualifications reviewed by a local pro and you'll get the best advice!
0 votes Thank Flag Link Thu Feb 21, 2013
Another option is to purchase a home which is approved for a Fannie Mae Homepath Mortgage. Only a 3% down payment is required and there is NO PMI. These homes can be found through out Harford County including Bel Air. 'd be happy to send you the listings if you would like.
0 votes Thank Flag Link Wed Feb 20, 2013
I appreciate the feedback so far everyone. This is all preliminary. I checked my credit score last month and it was 700. We're targeting homes in the $240,000 to $280,000 range and I think we'll have closer to 8%-13% down depending on how long we hold out and save. I know my fiance's credit score is much higher than mine (probably tier 0). I know I'm on the last peg on that second class, being at 700. I'm not a veteran, but rather a new grad nurse who just started my career in health care this month, so having the "history" at my job is impossible, as I can only show the pay stubs from February on. I assumed, after doing some research, that I'd need at least 3 months of pay stubs to show stability of income.
0 votes Thank Flag Link Wed Feb 20, 2013
The right answer depends on your credit score and long term objectives. If your credit score is in the top half of the tier you are probably better off going with a conventional loan with PMI, No PMI options imbed the cost of the MI in the interest rate. Depending on your score and how long you plan to live in/keep the loan determines which method is the best deal.

Good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Wed Feb 20, 2013
You might try Homebuyer's Choice, a conventional loan, though I'm not sure of the qualifications. Please let me know if this helps!
0 votes Thank Flag Link Wed Feb 20, 2013
You are correct, FHA is going to get awfully expensive come April 2013. Worse yet, if you put less than 10% down, go FHA, and don't get your FHA case number until after June 1 of this year, your FHA mortgage insurance stays on your loan FOREVER until you sell or refinance. There are many viable options out there other than FHA which would be VA(if you are a veteran), USDA Rural Housing (0% down payment), and, if your credit score is above a 680, Conventional financing with as little as 5% down. If your FICO score is 740 or above, putting as little as 3% down Conventional is a viable option.
Call or text me at 503-810-1119 and we can discuss further how to assist you.

Paul W. Thompson
Mortgage Consultant
HomeStreet Bank
NMLS #404052
0 votes Thank Flag Link Wed Feb 20, 2013
There are several options, including the 80/10/10 mentioned below. You can use conventional financing with as little as 5% down and pay a single MI premium at settlement, thereby avoiding monthly premiums, or you can take a higher rate and the lender will pay the premium. In the area around Bel Air, if you're not too close to town, USDA Guaranteed Rural Housing loans are a great option, allowing for zero down, lower rates than conventional loans, and very low monthly MI premiums. Here's a website you can use to pull up a map of eligible areas, check the see if you're within the income limits, etc. http://eligibility.sc.egov.usda.gov/eligibility/welcomeActio…

Call me if you have any questions at 410-960-3272. Have a great day.
0 votes Thank Flag Link Wed Feb 20, 2013
Hello!

There are other conventional loan options available that require less than a 20% down payment - it all depends on your credit rating, financial disposition, home price and other factors. There are also other loan options other than FHA that require a minimal down payment, and in some cases no down payment (100% financing). You are correct that the fees and financing structure associated with an FHA loan will very soon be changing, and not for the better.

You best option is to speak with a qualified mortgage professional who can help guide you to the best loan scenario that will fit your needs and budget. Feel free to contact me and I can put you in touch with a loan officer who can help you with this first step.

Best Regards,

Mark Parker, ABR/GRI
0 votes Thank Flag Link Wed Feb 20, 2013
Hi
There are a few options to get out of pmi without 20% down. Credit will be a major factor. If you can do 10% down an 80/10 would be a great option. Call me to discuss. 443-793-0331
0 votes Thank Flag Link Wed Feb 20, 2013
There are some conventional loan options where you can put as little as 5% down -- but everything depends on your financial circumstances, price of house, and credit.

If you'd like more information or to speak with a mortgage professional who can help guide you through your potential options, please let me know. I work with a few who can help you determine what may be best for you based on your situation!

Thank you!

Sincerely,
Marney Kirk

Keller Williams Excellence Realty
0 votes Thank Flag Link Wed Feb 20, 2013
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