aksarkar28, Home Buyer in Houston, TX

Please let me know the pros and cons of 3.5% FHA downpayment as opposed to 5% downpayment. Thank you!

Asked by aksarkar28, Houston, TX Wed Aug 22, 2012

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I'm assuming your talking about FHA in both options. If you have less than a 95% LTV the monthly MI is every so slightly lower than if you just put down 3.5%-5%. It is such a small difference it is really probably not worth to most consumers.

If you have the option to put down 5% you should look at the conventional option assuming your credit is excellent. You may be able to get lower monthly mortgage insurance than going FHA. I just recently refinanced a client's $265,000 FHA loan. We initially were going to go streamline but because there were no valuation issues they decided to go with a conventional refinance. So we had to do an appraisal but the monthly MI was about $130 less than the FHA streamline refinance.

So make sure you talk with a lender who can give you all of your options so you can see which one makes the most sense and saves you the most money over the long term. If you would like some options please feel free to email me or give me a call.

Best of luck to you,

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Wed Aug 22, 2012
The 3.5% down payment says FHA to me. Pros, easier qualifying, cons, much higher mortgage insurance and slightly lower interest rate. 5% down says conventional. Slightly better equity position, and lower payment due to lower PMI.

A good loan officer knows which program you best qualify for, and shows you the comparisons.

Barbara Coker
Licensed Mortgage Loan Officer
100% Home Loans All Over Texas
0 votes Thank Flag Link Wed Aug 22, 2012
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