You can now put down 3% when buying a home if you have at least a 620 credit score. Before the housing collapse we were allowed to put down nothing, now we are back to putting down only 3%.
If you are buying a home the 3% down payment can be all given to you as a gift from a family member, and if you have the seller pay your closing costs you can now buy a home with a conventional mortgage with no money out of your pocket.
You must be a first time homebuyer which means you have not owned a home within the last 3 years to qualify for the 3% down payment program.
If you have a good credit score above 740 you could avoid PMI altogether, Barclay Butler Financial can do a LPMI (lender paid mortgage insurance) loan with no adjustment to the rate.
This 3% down program is only available on single family homes, townhomes & condos. You can not buy a multi unit property with only 3% down, however you can still buy up to a 4 unit property with only 3.5% down and go FHA. Again the entire down payment can be gifted from a family member.
If you want to refinance you will only need 3% in equity or 97% LTV (loan to value). This can be very beneficial if you have a Fannie Mae loan and want to lower your monthly PMI or even remove it all together. Your credit score will have to be higher than 620 if you want to lower your monthly PMI on a refinance. I would say you need to be at least around a 680 credit score.
Your current loan must be a Fannie Mae loan to qualify at 97% LTV on a refinance. You can go to the Fannie Mae website to see if you have a Fannie Mae loan or you can call Barclay Butler Financial Inc. we can look it up for you.
The 3% down payment can be an alternative to the FHA loan program. FHA loans have the UFMIP (Up front mortgage insurance premium) and they also have higher monthly MIP (Mortgage insurance premium).
A conventional loan will be a little more difficult to qualify for than an FHA mortgage. Conventional loans have lower debt to income qualifications and the credit scores have to be higher than an FHA loan. With FHA you only need a 580 credit score not a 620 credit score. Conventional loans are also tougher on significant derogatory credit issues, like bankruptcies, foreclosures, and short sales. They also will not allow you to exclude the monthly payments for student loans if they are deferred for one year or more like FHA will allow. Lastly conventional loans require you to pay off any judgement you may have on your credit report versus FHA which will allow you to setup a monthly payment plan.
Barclay Butler Financial Inc. is currently offering the 3% down program. If you are interested in either purchasing or refinancing with this new program please contact us via phone, email or text.
Barclay Butler Financial Inc. also offers numerous other mortgage programs.