What are the mortgage programs that lie in between the range of 3% (FHA) and 20% (conventional)?

Asked by KT-3999, Fremont, CA Fri Dec 12, 2008

I am currently looking out for a lender to get my house purchase financed. I see that there are programs like FHA which ask for 3 % downpayment PMI or 20 % downpayment conventional loan.

I am in a position to shellout 7 % for downpayment. Isnt there any program which lies in between 3 % - 20 % downpayment range.

I get advise to go for FHA PMI. As my, 7 %, downpayment will be more than 3 %, my PMI will be lesser if I go with ONLY 3 % down. Is this the best I can expect from the market now?

Secondly, I see that loans amount with less than the magical 417 K have lesser interest rate. I am short of 25 K to qualify for this program, my loan amount is 442 K on a 475 K loan. Are there programs that can give me a short term 3 year 25 K unsecured loan and a 30 year conventional 417 K loan.

Could somebody help me with information on loan programs.

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Jim Gallup, , Walnut Creek, CA
Fri Dec 19, 2008
Hi Neaz,
I would add a couple points to Robert C's response:
1. Look at your cash reserves. If you don't have a lot in reserves, go with 5% down vs. 7%. It won't change your payment much and you will have the security of cash should an emergency arise. Also, for loan amounts over $417,000 you will need 5% down for FHA.
2. FHA is a great loan in today's market because it is an assumable loan. Rates are at all time lows, and if you believe rates will be higher when you sell, it makes sense to have a loan that you can sell with your house. Your low rate assumable loan will make your home much more attractive than the competition at time of sale.
3. You won't find reasonable financing for the $25k shortage to make your first $417k. The difference in rate is minimal anyway.
4. Very important if you don't have a lot of cash: write the purchase offer with the seller paying your closing costs. FHA will allow up to 6% of the sales price to be credited by the seller for your closing costs. If you can negotiate the contract in this way, you will be in a much better position to preserve capital, as your only out of pocket will be the 5% down.

Good luck to you!
0 votes
Robert Chome…, , San Diego, CA
Fri Dec 12, 2008
Hi Neaz,

Yes with 5% down you can do a conventional loan vs. an FHA loan. With a conventional loan your mortgage insurance will all be monthly vs. FHA where some of the MI is "up front MI" and added to the loan balance and some is included monthly. The interest rates are fairly comparable between FHA and conventional. The amount of mortgage insurance you pay would be based on how long you held the loan. Over a longer period you may pay less with FHA. If you put 10% down your mortgage insurance would be less.
0 votes
Melodie Dors…, , Lake Forest, IL
Fri Dec 12, 2008
The best advice you can have is from a qualified lender/loan officer whom you trust. I can reccomend Tracey Naughton at Bank of America and she can find a good loan officer for you to work with in CA. tracey.naughton@bankofamerica.com.
Neaz, if you need a terrific Realtor to help find that house, please contact me and I will personally find someone you Enjoy working with And Trust in the area(s) you would like to buy. melodie.dorsch@cbexchange.com

Hope you have a Wonderful Time! And Happy New Year, too.
0 votes
Skip Stamper, Agent, Ormond Beach, FL
Fri Dec 12, 2008
Go to http://www.everyloan.com or call direct 949-999-5626
California Based Licensed Broker
Ask for Sam
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