Is it possible in today's mortgage market to get 30yr fixed interest loan with 4% interest, by only paying 5% as a down payment.?

Asked by Boryana, Crofton, MD Fri Apr 27, 2012

Hi there,
We are wondering should we buy a house now, or wait a year to save for a better down payment risking higher mortgage rates and house prices.

To be more specific, what I am trying to figure is, is it possible in today's mortgage market to get 30yr fixed interest loan with 4% interest by only paying 5% as a down payment.
Some more details:
* Both of us are employed.
* We have no major debts (just some credit card payments).
* Our credit scores are about 800.
* The houses we are looking at are about 2 times our yearly income.

The only problem is that we got our jobs recently and haven't saved enough for a decent down payment.


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Akil Walker, Agent, Upper Marlboro, MD
Thu Jan 17, 2013
Hello Byrana,

FHA offers 3.5% down payment on a home and a interest rate of 3.4% today. There are some conventional loans as little as 5% and 10as well.
0 votes
Curtis LeMay, Agent, PASADENA, MD
Thu Dec 13, 2012
the state of Maryland has a program out where they will assist in the closing costs a home ar $200,000 the state will give you a $5,000 credit the seller can pay up to $12,000 toward your closing costs based on a $200,000 home you would need about $2,000 interest rates around #.%%
0 votes
Ray Halleran, Agent, Crofton, MD
Tue Dec 11, 2012
I am working with a lender that now offers Conventional Loans around 3.5% interest rate with only 3% down providing credit is good (700+). There are several advantages over the FHA loan.

Only 3% down FHA min is 3.5
Mortgage insurance is lower
When you have the equity you can remove the Mortgage Insurance
REO/Short Sale sellers would prefer a Conventional loan over an FHA/VA loan
0 votes
Nick Pakulla, Mortgage Broker Or Lender, Rockville, MD
Fri Apr 27, 2012
You can, but it will come with mortgage insurance. You have a few options, if your loan is below 417k you can put 5% down and go conventional (cheaper mortgage insurance than FHA).

There are really two types of conventional MI, monthly and where it is paid for upfront. Upfront can be paid by the bank, by you, or a combination.

I would be happy to show you some scenarios, but it is definitely worth running the numbers to see the differences.
0 votes
Jessica Hood…, Agent, Gambrills, MD
Fri Apr 27, 2012
Hi Boryana,

Our market is on the rebound near Fort Meade particularly in areas like Crofton that are most popular with Fort Meade and NSA employees and contractors. It is definitely a great time to jump in to buying. I just settled a loan with a 3.75% interest rate. And you may even want to consider going FHA with as little down as 3.5%. Keep in mind that one of the biggest benefits of homeownership (beside the sheer thrill of it) is the tax write off your mortgage interest provides. So the sooner you are in, the sooner you can take care of that and the sooner you are to paying off your biggest investment and building some real retirement value. And I just don't see the combination of incredible interest rates and rock bottom prices being a long-term option in our area.
0 votes
Maria Avella…, Agent, LAUREL, MD
Fri Apr 27, 2012
The interest rates that individual receives in the lon are more driven by their credit score nd financial situation. To purchse a home under FHA THE REQUIREMENT IS 3.5 % down payment. For a VA loan is basically 0. In the case that you are not able to qualify for the lowest interest rate, there is always the possibility of buying points To decreaseyour intetest rate.
Obviously a loan officer is the person that can give you the specifics to your situation,
I can recommend a good one.
0 votes
Greg Myers, Agent, Gaitherburg, MD
Fri Apr 27, 2012
The FHA (Fair housing Adminisrtation) loan program only requires 3 1/2% down but does require a monthly insurance premium which is included in your monthly payment. The FHA loan down payment
funds can be your own funds, can be gifted from a relaative or if your have a 401K program you can borrow funds for the 401K to purchase your home.

The FHA program will allow the seller to pay 3% of your closing costs. If you going to purchase a home this year have your loan process and lender documents done before you step foot into the first home you want to see.

So many internet home shoppers are now intering the market place without the loan process started.

Greg Myers
RE/MAX Realty Group
0 votes
Peter Sokows…, Agent, Crofton, MD
Fri Apr 27, 2012
From what you are disclosing... you should be fine. Being self employed myself... your taxable income is what the lender will likely base your income on. Are to still about 2X your income to equal the home purchase?
Interest rates are below 4% right now for most loan types with excellent credit history.
0 votes
Jackie Endic…, Agent, Rockville, MD
Fri Apr 27, 2012
I am not a lender but FHA loans only require 3.5% down and are at or near 4% interesdt for 30 year terms.
You may also qualify for grant or dererred interest loans to help with down payment and closing costs thru state programs.
You should contact a lender to discuss your credit and financing details to best determine your plan to finance a purchase.
I would be happy to refer you to a lender.
0 votes
Christina Yo…, Other Pro, Odenton, MD
Fri Apr 27, 2012
I'm not a lender, but YES. I am working with a buyer client who qualified for a 4.--% 30 yr fixed with 3.5% down. If you would like the referral from the loan officer we spoke with at Suntrust Bank, let me know!
0 votes
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