3% Down Conventional Mortgages Becoming Available Again. With the recent changes by FHA making it more difficult for especially First Time Home Buyers to purchase houses, Conventional Mortgage Program that have not been available for a while are now making their way back. One of those Mortgage Programs that more Lenders are dusting off and making available again is the My Community Mortgage, which is a 3% Down Conventional Mortgage.
The My Community Mortgage Program stopped becoming available when Private Mortgage Insurance (PMI) Companies stopped making PMI available on Mortgage Programs with less than a 5% downpayment. In many cases, such as in the case of Condominiums, PMI Companies were requiring as much as a 10% downpayment before they would issue PMI on a mortgage. Without the ability to get PMI approval, Lenders for the most part stopped doing My Community Mortgages.
With the recent change and increase by FHA to their Monthly Insurance Premiums (MIP), PMI Companies have started to relax the requirements on obtaining PMI, and PMI is once again available with as little as 3% down. The PMI is not only available on 3% down Mortgages, but at a much reduced factor (.85) in stead of the FHA MIP factor (1.35).
The My Community Mortgage Program does have some restrictions, that other Conventional Mortgage Programs do not have, but as you will see in the program description below this program will be a major benefit, especially for First Time Homebuyers as we go forward.
(Note: Above Interest Rate is for example only and not the actual Interest Rate for the day)
As you can see from the comparison above the My Community Mortgage is $43.30 less per month. Furthermore, the PMI monthly Payment cancels at 78% LTV, where as the FHA will be paid for the life of the loan. That means that when the My Community Mortgage reaches 78% of the original sales price (LTV) the Borrower's monthly payment will be further reduce by $123.68 per month, but the $195.41 per month on the FHA will continue regardless of how much the LTV is reduced by, it will never go away.
My Community Mortgage Program Guidelines:
- Maximum Loan Size $417,000
- Purchase Loan Only (no refinances)
- 97% Maximum Loan To Value (LTV)
- 680 Minimum FICO Score
- 45% Maximum Debt-To-Income Ratio (DTI)
- Buyer Education Class required for First Time Home Buyers (class can be taken online)
- No UpFront Funding Fee
- Income Limit - 100% of Fannie Mae Area Median Income
- 3% Downpayment needs to be from the Borrower's own funds
- Exception: If FICO Score is 740+ and DTI is 41% or less the 3% Downpayment can be gifted
- Seller Paid Costs:
- 3% if Downpayment is less than 10%
- 6% if Downpayment is 10% or higher
- PMI Factor .85 (however it may be lower if FICO Score is 740 or higher)
- PMI Cancels at 78% LTV
- Must have a DU Approved/Eligible
- Only property owned by the Borrower
- Approved Properties:
- Owner Occupied Only
- Single Family Houses
- Warrantable Fannie Mae Condominiums
- Detached PUD
- Ineligible Properties:
- Non Owner Occupied (investment properties)
- Manufactured Homes
- 2-4 Family Units
- Family Sale/Identity of Interest
- Property Flips (owner must have title for 180+ days)
3% Down Conventional Mortgages Becoming Available Again, and with the recent FHA changes, My Community Mortgages will be one of the Loan Products of choice, especially for First Time Homebuyers.
*******************************************************************************
Info about the author:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
Comments(68)