Conventional loan down payment
usual explanation for a conventional mortgage (also called a conforming
mortgage) is a home loan that is not government insured or guaranteed.
The FHA, Veteran, and USDA mortgages are all backed (insured) by
the Federal government. The alphabet loans (FHA, VA & USDA)
require a substantial upfront mortgage insurance premium and monthly
mortgage insurance (mip). The conventional loan does not require
any upfront mortgage insurance and does not require monthly mortgage
insurance if the down payment is 20% or greater.
The conventional loan meets the guidelines of either the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Corporation (Fannie Mae). Think of the conventional mortgage as your father and grandfather's mortgage. The down payments are usually five, ten, 15 or 20 percent; or greater. A down payment of less than 20% requires private mortgage insurance.
THE MINIMUM DOWN PAYMENT FOR
FANNIE MAE (CONVENTIONAL) LOANS HAS BEEN REDUCED TO 3%!
Effective 12/13/2014 qualified applicant(s) can obtain a mortgage with only 3% down. The applicant or in the case of multiple applicants (i.e. husband/wife, partner/partner), one applicant must be a first time home buyer. The Conventional 97 program may only be used for single-family dwellings. This includes single-family attached homes, single-family detached homes, townhomes, co-ops , condominiums, and row homes. The maximum loan size is limited to 417,000. No investors - owner occupied residences only. Adjustable interest rate loans are not permitted, fixed rate only. A higher credit score maybe required if the borrower(s) is receiving gift money for the down payment. Read more
Why should I get a conventional mortgage?
1. No Upfront Mortgage Insurance: Conventional
home loans do not require an initial (upfront) mortgage insurance
payment. The FHA, VA, and USDA loan programs all require an upfront
premium. The "funding fee", as it is called, is usually
financed with/into the loan. It should be noted that service related
10% disabled veterans are exempt from the VA funding fee.
Since conventional home loans do not require the upfront mortgage insurance, the loan amount is lower and consequently, the monthly payment is a bit lower.
2. No Monthly Mortgage Insurance: The FHA and USDA loan programs require a monthly mortgage insurance payment. The monthly mortgage insurance never goes away . . . even with a 20% down payment or equivalent equity. Conventional home loans do not require mortgage insurance with a 20% down payment. Conventional loans do require monthly mortgage insurance with less than twenty percent down payment; however, after paying down the mortgage by 22%, the lender is required to remove the monthly pmi payment. See below
3. Investor Loan: The FHA, VA, and USDA loan programs prohibit investors. The conventional mortgage does accept investors. Currently, the down payment for a single family investment home is 15%. Two to four unit investment properties require a 25% down payment.
4. Second Home: The FHA, VA and USDA loan programs do not permit second home financing, however, you can obtain a mortgage for a second home with a conventional mortgage. The second home mortgage usually requires a 10% minimum down payment.
5. Higher Loan Amount: Congress establishes the maximum loan limits for FHA, VA, USDA and conventional loan programs. The conventional loan limits are usually higher than the FHA program. There is no loan limit with the VA or USDA mortgage.
Requirements for a conventional loan
Click on the question below to reveal the answer
► Are conventional loan rates higher than FHA?
► Are VA loan rates higher than conventional?
► Can a VA appraisal be used for a conventional loan?
► Can closing costs be added to conventional loan?
► Can I buy a condo with a conventional loan?
► Can I change my FHA loan to a conventional loan?
► Can I get a conventional loan with 10% down?
► Can I get a conventional loan with a 620 credit score?
► Can the seller pay the down payment on a conventional loan?
► Can you buy a condo with a conventional loan?
► Can you pay pmi upfront on a conventional loan?
► Can you roll closing costs into a conventional home loan?
► Do I have to pay mortgage insurance on a conventional loan?
► Do you have to have 20 percent down for a conventional loan?
► Do you need an appraisal with a conventional loan?
► How is an FHA loan different from a conventional loan?
► How long do I have to pay mortgage insurance on conventional loan?
► How much do I have to put down on a conventional loan?
► How much is jumbo conforming loan?
► Is a conventional loan a fixed rate loan?
► Is a conventional loan a government loan?
► Is a termite inspection required for a conventional loan?
► Is my loan FHA or conventional?
► What credit score do I need for a conventional home loan?
► What is a non conforming conventional loan?
► Who pays closing costs on a conventional loan?
See Seller Assist