The internet does a great job of providing different information about the minimum down payment you need to buy a house. Read one article, you’ll get an idea of what it would take, read another article, and it’s completely different information. So how do you assimilate the endless amount of information online about buying a home? Here is the reality; the minimum down payment you need to buy a home, unless you’re a military veteran, is just three percent. Here are some things you should pay attention to if you are considering buying a home in the near future.
With a good credit score, say 700 or more, you can buy a home with as little as 3% down on a conventional mortgage with monthly mortgage insurance that you can take out in the future. This is the minimum you need for a conventional loan. The other type of loan is an FHA loan which is 3.5% down. Both have PMI. PMI is called Private Mortgage Insurance which insures the lender in case of payment default.
PMI on a conventional mortgage can be released or request its removal in the future. The PMI on FHA mortgages must be refinanced. This is the main separator between these two types of loans as far as the PMI is concerned. So if you’re short on cash but have good income and a good credit score, an FHA loan or a conventional 30-year fixed rate loan could prove to be affordable channels for you and your family. when looking for a home buying choice.
The other separator between the two types of loans is the credit score. An FHA loan will allow you to buy a home with a much lower credit score with just 3.5% down payment. It’s incredibly more flexible and it serves a wider range of financial situations than a conventional loan which is a bit more specific and generally wants a score of 700 credits or more. That doesn’t mean you can’t get a conventional loan with a credit score below 700, but if you have a credit score below 700, you’ll generally need a 5% conventional loan to qualify for this program. mortgage loan best suits your family’s financial needs.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes, vacation homes and investment properties. Learn more about www.sonomacountymortgages.com.