UPDATED JANUARY 13, 2010: Please refer to my most recent post regarding minimum down payment requirements. They are based on loan amount range as well as property type. http://loansbyireneblog.com/2009/09/20/major-urgent-changes-to-mortgage-insurance-requirements-on-condos/
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***UPDATE JUNE 24, 2009: Honestly, I’m surprised this lasted as long as it did. I just got word that effective June 29, 2009, this 5% down option will no longer be available. If you do not have 10% down and do not have the ability to receive a gift from family, then we will need to look into getting you an FHA loan.***
(Previously written post on 1.26.09 regarding the 5% down option):
Good news – a couple of conventional lenders (non-FHA) are still able to lend with 5% down. In most cases, getting a conventional loan over an FHA loan makes more financial sense because it is cheaper in interest rate and in upfront costs.
The caveats to this conventional 5% down loan:
1. The down payment must come from your own funds. If you’re getting a gift from family, it must sit in your bank account for 2 months before being verified.
2. The maximum loan amount is $417,000.00, allowing you to buy a ~$440,000.00 home.
3. The property must be a single-family home or a detached PUD. It cannot be a condo or attached townhome; otherwise, you must put 10% down minimum.
4. You must have a minimum FICO score of 680. (UPDATE 4.26.09: minimum FICO required is 720).
5. UPDATE 4.26.09: Property being purchased must be owner-occupied, not a second home or investment property.
Of course, the more you put down, the more options you have by being able to go to different lenders, and the more you’ll save monthly. But this is a great way to try to get into the market, and there are some great deals out there.
{ 12 comments… read them below or add one }
please let me know aboth the 5% conventional
Hi Sonja, thanks for your comment! The 5% conventional down program is unfortunately no longer available because of MI companies. The general rules on down payments for conventional loans are as follows:
Assuming CONFORMING loan limit ($417k and below). Single-family home or PUD: 10% down minimum. Condo: 15% down minimum.
FHA is still allowing as little as 3.5% down, but of course it has its disadvantages that I highlight for everyone.
Let me know if you have any other questions.
Irene
Sorry for being OFFTOPIC but which wordpress template are you using? Looks amazing.
Hi Joel, thank you! I use the theme ” Quentin”
Hello, I recently had an offer accepted on a home in Bonita, CA however with my excellent credit (801) and steady annual income (65k) I am having trouble finding a reasonable payment (2500, PITI) without PMI or 2+ points. The sale price is 405k and I have at least 5%, maybe I can stretch 10% at closing.
If you feel you can assist, I’d love to speak with you. Thanks in advance! Steven 6099158812
Hi Steven, thanks for your comment. I will send you an email right now. Anything below 10% down will put you into an FHA loan (assuming it’s a single family home or PUD). I’ll go over the numbers in my email, so please keep your eyes out.
Best,
Irene
I am trying to get a conventional loan for $400k single family home with 10% down. My wife and I both have FICO scores above 740.
Another lender has denied me for a conventional loan cause my debt ratio is 55%.
Please let know if you help us find a non FHA loan.
-Sean
Hi Sean, both FHA and Conventional have qualifying (debt) ratio requirements, and FHA is actually more lenient than Conventional. FHA will generally go up to 50% (with automated approval) whereas Conventional with less than 20% down will only go up to 45%, sometimes 41%. Do you or your wife have bonus income we could potentially use? Or a 3-year history of capital gains income? Do you have debt you could pay down? (If part of your debt ratio is due to a car loan or other installment loan, you could pay it down to where you have 10 months left to pay, and then it won’t be counted in your ratio). Please call me at 408.257.1681 or email at irene@loansbyirene.com to discuss your specific scenario.
Thanks for the comment!
Irene
Please help. My Wife has a credit score of 634 and I have a score of 720. We want a house that cost 400k. My income is 75k and her’s is 75k too. Is there any loan out there we can qualify for to buy this house with putting 5% down?
Hi Kelvin, unfortunately, you need a 740+ to do a conventional loan with 5% down. You may qualify for an FHA loan with just your credit score and your income, but your wife’s is too low. I’ll send you an email right now. Thanks, Irene
Hi Irene,
Is the %5 Conventional Loan still available? My score is over 740, but my husband score is at 600. However, I’m not planning to put him on the loan. Would it be possible to have my name on the loan only?
Hi Hong, if you can qualify on your own, then yes, we can absolutely do the loan in your name only.