5% Down Payment Home Mortgage Loans
There has been a lot of talk on the web about home buyers now being able to purchase a home with a conventional loan with only a 5% down payment. If that’s the case, then this could open doors for potential home buyers who just don’t have a lot of cash on hand, so to get to the bottom of the rumors, I spoke with Chris Thornton at Primary Residential Mortgage to get the “Real Deal”.
It turns out the company Chris works for (Primary Residential Mortgage) have just started offering this option in the past week along with some major banks like TD Bank, Wells Fargo and Bank of America to name a few. Typically with conventional loans, home buyers had to come to the closing table with at least a 20% down payment. With the average home price of $330,026 in Charleston County in October 2013, that would mean buyers would have to come up with a down payment of just over $66,000. If you’re like me, then you probably don’t have an extra $66,000 laying around. What the 5% down payment mortgage will allow you to do is put down only $16,501.30, and the best part is, 2% of that amount can be from gift funds! That’s right! If you have a family member that owes you money, then now would be a good time to collect. So to re-iterate, for a $330,026 home in Charleston, you only have to come up with $9,900.78 and someone else can provide you with a gift for the remaining $6,600.52! Good deal right? No! Great Deal!
Chris says, typically, most first time home buyers only had one option, which was an FHA loan. It required you to make a down payment of 3.5%, but you would also have to pay a Private Mortgage Insurance (PMI) until you reached 22% equity in your home. Recently though, FHA changed the rules, and that Private Mortgage Insurance now stays with you for the entire length of the loan! As you can imagine that amount could add up! With the 5% down payment mortgage you will still be required to pay Private Mortgage Insurance, but the good news is, after you’ve reach 20% equity in your home, the fee drops off! That can mean significant savings over the long run.
So how do you qualify for this 5% down payment home mortgage?
1) You’ll want to have a good credit score of at least over 660. Anything under 660 and it’s going to affect your interest rate, meaning a higher monthly
2) You’ll definitely want to have 5% saved up, or at least 3% and a relative or third party who’s willing to provide you with the remaining 2%.
3) You’ll want to contact Chris at Primary Residential Mortgage and get a pre-approval letter, then call me to find your new home! Just email Chris at firstname.lastname@example.org and let him know I sent you! Then once you’re pre-approved, you can contact me to start looking for your new home!