Financing in 85340>Question Details

Tim O'Buckley, Real Estate Pro in Glendale, AZ

This is a question for Realtors and lenders. Is anyone aware of any lenders doing conventional loans less then 15-20% down on condos?

Asked by Tim O'Buckley, Glendale, AZ Tue Aug 10, 2010

I have a buyer that wants to buy in a particular area but they are not FHA approved, so she is looking to do conventional financing. Every lender I have talked to in the past, says they have programs but need 15-20% down.

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Chris Richter’s answer
The rates/programs from PMI companies to lenders vary.

Find a banker who was doing "boring" loans during the boom, they will likely have some elevated status with one or more of their PMI companies. It's a pretty sweet deal right now. Some of these preferred rate sheets are 5% more aggressive on LTVs, 20 points more flexible on FICO, and some have dropped the condo distinctions that were really problematic--I'm in Chicago. A lot of condos, not a lot of FHA approvals.

Phoenix still has some market condition overlays--for example, no, you don't get the 90% investor...yet...but the insurers are getting very aggressive again. Brian's point was very balanced--not a slam dunk, certainly not out of the question.
0 votes Thank Flag Link Wed Aug 11, 2010
I appreciate everyone's input. I have heard the same thing about MI. The lenders can do it, but MI won't insure. The 10% route is an option for this buyer, but I don't think the score is 720.
0 votes Thank Flag Link Tue Aug 10, 2010
Tim -
Regarding Ted and Anthony's comments...Ted is correct that most of us brokers out there have lenders that will do 95%, but not all MI companies will do them. Since MI will be required (other than with a HomePath property) it is up to the MI company guidelines and they are very picky these days especially with maximum financing (i.e. 95%). If your client is able to do 10% down you will be in much better position as there will be several options for MI at 10% down. If 5% is the only way to get your client in a home, then both you and their lender will need to properly advise them of the potential issues that may arise when dealing with MI underwriting guidelines and condo project requirements. My point is that don't assume 5% down is a slam dunk, but don't assume that it is not possible either. As with any loan these days, having an experienced loan officer with the flexibility to use different funding sources is critical.

Brian Cardenas
Mortgage Consultant
The Cardenas Mortgage Team
0 votes Thank Flag Link Tue Aug 10, 2010
Tim -
Regarding Ted and Anthony's comments...Ted is correct that most of us brokers out there have lenders that will do 95%, but not all MI companies will do them. Since MI will be required (other than with a HomePath property) it is up to the MI company guidelines and they are very picky these days especially with maximum financing (i.e. 95%). If your client is able to do 10% down you will be in much better position as there will be several options for MI at 10% down. If 5% is the only way to get your client in a home, then both you and their lender will need to properly advise them of the potential issues that may arise when dealing with MI underwriting guidelines and condo project requirements. My point is that don't assume 5% down is a slam dunk, but don't assume that it is not possible either. As with any loan these days, having an experienced loan officer with the flexibility to use different funding sources is critical.

Brian Cardenas
Mortgage Consultant
The Cardenas Mortgage Team
0 votes Thank Flag Link Tue Aug 10, 2010
@Anthony - Many lenders have the same program except that the ultimate decision is not the lender's. They are not the ones who decide these matters.

When you are dealing with anything that is less than 20% down (Other than HomePath) you are mainly at the Mortgage Insurance Company's mercy. As sexy as 5% down sounds, there are very little of them closing and those that do are scrutinized heavily and require extra leverage and you are at the MI company's time table.

Lenders that push this are doing it to call attention to themselves, that is all. Ask how many close and you'll find the truth of it. Its just not worth the ultimate destruction of the relationship or aggravating the client as most of them fail (In my book and after hearing the MI company's presentation, I personally don't think they will work at all).

Just my opinion but then what do I know.
Web Reference: http://www.tedcanto.com
0 votes Thank Flag Link Tue Aug 10, 2010
Tim,

We have a lender, Jared Fuller with The Lending Company, who can do a 95% LTV on a conventional loan on a condominium as long as the condo is investor approved. We would need to certify that the condo meets all investor criteria. The issues we run into most often are occupancy rates and HOA delinquency rates. The owner occupancy rate must be at least 51% and the % that are delinquent on their HOA dues must be under 15%.

I hope this helps.

Tony Sherman
Arizona Team Realty
623-826-1597
0 votes Thank Flag Link Tue Aug 10, 2010
Tim -

You can do a warrantable condo in AZ, with 10% down and a 720 score. Let me know if I can help.

Brian Cardenas
Mortgage Consultant
The Cardenas Mortgage Team
0 votes Thank Flag Link Tue Aug 10, 2010
Hi Tim,

We are, however, the property (Condo) must be a Fannie Mae and we will use the HomePath Program. This will require a 5% down payment.

We also do not require an HOA Questionairre unless they were going regular conventional

Give me a call at 480.344.3671 if you have any further questions.
0 votes Thank Flag Link Tue Aug 10, 2010
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