The Mortgage Buddy Reviews 3% Down on Conventional Loans

I just wanted to highlite an alternative to the FHA 3.5% down loan for clients with strong credit scores and lower debt to income ratios.

Overview

This is a loan program that provides a fixed interest rate and level payments for the life of the loan. This program is for borrowers with good credit histories who may have difficulty in saving for a down payment. The borrower does not have to be a first-time homebuyer.

Cash Reserves

2 months reserves required, regardless of DU approval

Condominiums/PUDs

Condominiums are not allowed.

Credit

1. Minimum 720 FICO regardless of DU approval.
2. For additional credit history requirements for bankruptcy, foreclosures, or short sales, refer to Derogatory or Adverse Information.
3. For additional credit report requirements, such as inaccurate tradelines, refer to Credit Reports.

Down Payment

3% minimum down payment from the borrower’s own funds is required, regardless of DU approval

Gifts

            Gifts are allowed after the borrower has made the minimum 3% down payment from their own funds. 

Investment Properties

Not allowed.

Loan Terms

15, 20, 25, and 30 Fixed Rate only

Loan Purpose

•        Purchase 
•        Rate and term refinance
•        Cash-out refinance – not allowed

Maximum/Minimum Loan Amount

1. Maximum Loan Amount: Conforming loan amount
2. Minimum Loan Amount: none.

Maximum/Minimum LTV

1. Maximum LTV: •  Maximum 97%  
2. Minimum LTV: •     95.01%

Mortgage Insurance

•         35% Mortgage Insurance coverage is required.          

Non-Occupant Co-Borrower

Not allowed.

Occupancy

Owner-occupied primary residence only.

Properties

Eligible:

•       1 unit Single family residence attached and detached         Attached and detached PUDs.

Ratios

•        Maximum DTI as determined by DU and MI availability – MI’s may go up to 45%, generally with a minimum 720 - 740 fico.

Seller Contribution

•         Maximum contributions are limited to 3%.  
•         The interested party contribution may not be applied to the borrower’s minimum required contribution or any part of the down payment. The contribution and premium pricing may only cover closing costs and prepaids in excess of the borrower’s initial contribution.

Subordinate Financing

Not allowed.

I will be spending this week updated my blog with newer products that are available to help you reach more clients. If anyone has any questions please reach out to me.