King county allows up to $567,500. You donâ€™t have enough money for down payment, so youâ€™ll need to qualify for the Home Key Plus program (see link below). You can get up to $10,000. As much as I would love to do your loan (Iâ€™m licensed in all 50 states), Iâ€™d rather you use a bank that is familiar with this program than for me to tell you that I know what Iâ€™m doing, when in fact I didnâ€™t even know such a program existed until you asked.
I can tell you that Conventional lending wonâ€™t allow you to use this program because your own funds must be used for down payment.
Letâ€™s see if using Fannie or Freddie puts you ahead in terms of savings. For Fannie and Freddie (conventional lending), youâ€™ll need 5% down and have at least the equivalent of 2 mortgage payments sitting in a retirement or bank account. Your credit file must contain 3 lines of credit currently open and active within the last 12 months.
The difference in payments:
FHA Mortgage Insurance (MI) up front: 1.75% financed into the loan
Conventional Mortgage Insurance up front: None
Monthly FHA MI payment: 1.25% of the loan amount times the loan amount divided by 12 = monthly payment - $460 a month (based on loan of $442,0000 : $435,000 plus 1.75% up front fees)
Monthly Conventional MI payment: .0101% - $359 a month (based on loan of $427,500)
So, putting down an extra $7500 saves you about $101 a month in payment.
The difference in down payment between the two programs is about $5 per thousand. Thatâ€™s about $38 a month which gives you a savings of about $63 a month on your payment.
Now, letâ€™s take the $7500 extra that you paid and divide it by $60 = 126. This means that if you keep the house for more than 126 months (a little over 10 years), then it will benefit you to buy using conventional lending. Otherwise, FHA is the way to go.