Mortgage Downpayment Options
This article was written by our mortgage officer and I thought it was worth sharing , since mortgage requirements keep changing.
Changes to Mortgage Downpayment Options for Different Programs
Here is a summary of down payment options available:
0% (100% financing) VA (Veteran's) or USDA Rural Housing, use this website to see if an address is eligible: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do (then click on Single Family Housing and enter the address)
3.5% CHFA or FHA. ($8000 tax credit can be used for CHFA loans now, the previous $7500 tax credit could not)
CHFA is at 5.0% while FHA is at 5.5% ( These rates change daily) If your buyer is struggling to come up with 3.5% down, then FHA is better because no required 1% origination upfront.
Just about every lender is requiring a FICO of 620 or higher now for FHA
10% or more. Conventional Financing with PMI (private mortgage insurance up to 20% down)
There is only one Mortgage Insurance company that will allow 5% down in CT and they are very strict on FICO score (700+) and debt ratio (41%). Also keep in mind with conventional financing that when putting down less than 20%, 5% of the funds must be the borrowers own funds (meaning no large deposits on 2 months of bank statements). If borrowers do not have 5% of their own money, they need to go FHA where the entire down payment can be a gift.
Sean R. Smith, CMPS
Connecticut Home Mortgage