Minimum Down Payment Conventional Mortgage Loan Program
This BLOG On Minimum Down Payment Conventional Mortgage Loan Program Was UPDATED On January 1st, 2019
There are various minimum down payment requirement mortgage loan programs for home buyers.
- Home buyers who do not want to pay a monthly mortgage insurance premium, the minimum down payment required is 20%
- Conventional loans are different than FHA loans in the sense that the borrower’s credit scores play a significant role on mortgage rates
- For someone who wants a competitive mortgage rate on a conventional loan, their credit scores should be higher than 720 FICO
- A mortgage loan borrower will and can qualify for a conventional mortgage loan with a FICO score as low as 620
- However, they will probably get an extremely high mortgage rates
- For those conventional borrower with lower credit scores, they should also compare and consider getting a FHA Loan
5% Minimum Down Payment Conventional Mortgage Loan Program
Most minimum down payment conventional loan programs are the 5% down payment program.
- To qualify for a minimum 5% down payment conventional mortgage loan, the borrower needs a minimum credit score of 620 credit score
- Conventional loan with a credit score of 620, mortgage rates will be significantly higher
- Lenders want to see timely payments in the past 12 months
- No bankruptcy, short sale, and deed in lieu of foreclosure in the past 4 years
- No foreclosure in the past 7 years are other requirements for 5% down payment conventional mortgage loan programs
- Lenders will want to see three active credit tradelines that has been seasoned for at least 12 months
- No overdrafts in the past 12 months
- Overdrafts is not a deal killer but is not viewed favorably by mortgage underwriters
- Rental verification for the past twelve months is a must
- Rental verification is proven by providing cancelled checks for the past 12 months unless the home buyer has been renting their home from a licensed registered property management company
- A letter from the property management company stating the tenant has paid their rental monthly payments timely for the past 12 months is sufficient
3% Minimum Down Payment Conventional Mortgage Loan Program
First time home buyers can qualify for 3% down payment on conventional mortgage loans.
- However, to qualify for the 3% minimum down payment conventional mortgage loan program, borrower needs to be a first time home buyer
- First time home buyers is defined as a home buyer who had no interest in a home in the past 3 years
- To qualify for the 3% minimum down payment conventional mortgage loan program, the lender wants to see the following:
- a strong borrower with stable income
- good payment history, good reserves
- a minimum of 3 to 5 credit tradelines that has been seasoned for the past 12 months
- rental verification with less than 5% payment shock
- no overdrafts in the past 12 months
No Private Mortgage Insurance With The New 3% And 5% Minimum Down Payment Conventional Mortgage Loan Program
Mortgage insurance premium is required on all conventional mortgage loans that have more than an 80% loan to value.
- Conventional mortgage insurance premium is normally 0.67% of the mortgage balance paid annually in 12 monthly installments along with the monthly mortgage payment
- However, many conventional lenders offer LPMI, which are conventional loans that do not require borrower to pay monthly mortgage insurance premium
- LPMI stands for Lender Paid Mortgage Insurance.
- For a slightly higher rate, the LPMI conventional mortgage loan program saves the borrower the monthly mortgage insurance premium
Borrowers who are interested in 3% or 5% minimum down payment conventional mortgage loan program with no mortgage insurance premium, contact Gustan Cho Associates at www.gustancho.com . Mortgage applicants can also apply online at www.gustancho.com by clicking the APPLY NOW icon on the top right of this website.