The Internet does a wonderful job of supplying different information about the minimum down payment you need to buy a home. Read one article you’ll have an idea of what it would take, read another article, and its completely different information. So, how do you assimilate an endless amount of online information as it relates to 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 3%. Here’s somethings you should give some consideration to if you’re thinking about buying a home in the near future.
With a good credit score at say 700 or better you can buy home with just as little as 3% down on a conventional mortgage with monthly mortgage insurance that you can remove in the future. That’s the minimum that you need for a conventional loan. The other loan type is an FHA loan which is 3.5% down. Both of which have PMI. PMI is called Private Mortgage Insurance which insures the lender if payment default.
PMI on a conventional mortgage can be discharged or request its removal in the future. PMI on FHA mortgages must be refinanced. That’s the main separator between those two types of loans as it related to PMI. So, if you’re tight on cash but you have good income and a good credit score an FHA loan or a conventional loan on a 30-year fixed rate might prove to be affordable channels for you and your family to go when seeking out home buying choices.
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. It’s incredibly more flexible and it serves a wider range of financial situations than a conventional loan which is a little bit more specific and generally wants a 700-credit score or better. Doesn’t mean you can’t get a conventional loan with a less than 700 credit score but if you have a less than 700 credit score, you’re generally going to need for a conventional loan 5% down to work with when determining what mortgage loan program best suits your families’ financial needs.
If you’re looking to get pre-qualified to buy a home start today with a no-cost loan quote today!