Conventional Loan Product With Only 10% Down Payment And NO PMI

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

We have a new loan product that I am very excited about, it is a Conventional Loan Product With Only 10% Down Payment And NO PMI.  Yes you heard that correctly only 10% down and NO Private Mortgage Insurance (PMI).

Now before anyone says the other 10% is built into the interest rate, it is not.  In addition to only requiring a 10% Down Payment, and not having ANY PMI, this loan product also has a below market interest rate which has been running about .25% less than the Conventional Loan Products.

This means a Borrower's purchasing power is higher since the monthly payment will be substantially less without PMI.  Also Conventional Guidelines apply in regards to Gift Funds, so this really means the Borrower only really needs 5% of their own funds, and the remaining 5% can be gifted.

This loan product however, is not for everyone.  This loan product is meant for Borrowers with a minimum Credit Score of 720.  The Basic Program Guidelines are:

  • Max Loan Size $750,000
  • Purchase Only Properties
  • Only Owner Occupied Properties:
    • Single Family
    • Detached PUD's
    • Approved Condo's
  • Must receive DU Approved Eligible
  • Eligible Borrowers:
    • US Citizens
    • Permanent Resident Aliens with Green Cards only.
  • 43% Max Loan-To-Debt (DTI) Ratios
  • 6% Max Seller Contributions
  • Minimum 720 FICO
  • 1.5 Points
  • No Loan Level Price Adjustments

Below is a comparison between this loan product and a regular Conventional Mortgage on a house $350,000 with a 30 Year Fixed Rate Mortgage, and 10% Down Payment:

 

 

From the example above the monthly mortgage payment savings is $202.51 per month, the Borrower saves $18,300 over the 30 year life of the loan, and saves an additional $12,285 by not having any PMI.  Even though with this product the Borrower would initially pay 1.5 Points, compared to no Points for the regular Conventional Loan Product, they would recoup that money in just 25.92 months.

This Conventional Loan Product With Only 10% Down Payment And NO PMI is a fantastic opportunity for those who qualify, and one I will be making all of my Borrowers who meet the above guidelines aware of. 

 

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator 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, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & #FL and can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Rainmaker
2,772,995
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

George, I got all excited reading this as I am considering a refi.  Then I read purchase only properties.  This is good news for lending!  The PMI is excessive and kills opportunity for many.

Aug 03, 2014 03:48 AM #1
Rainmaker
2,287,784
Anita Clark
ColdwellBanker SSK Realtors ~ 478.960.8055 - Warner Robins, GA
Realtor - Homes for Sale in Warner Robins GA

George: This is going to help out a lot of buyers...no PMI with only 10% downpayment is great news.

Aug 03, 2014 06:15 AM #2
Ambassador
2,758,510
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

 Good afternoon, George. I have to agree with some of the other comments. This product will be beneficial to a lot of folks.

Aug 03, 2014 07:05 AM #3
Rainmaker
1,312,985
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

George, I agree that this is a great program and as you say the points paid would be a wash after 25 months.  That was the only hitch I noticed.

Aug 03, 2014 07:47 AM #4
Ambassador
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Kathleen it would be great if they extended it to refi's as well, but for now I am happy it exists for purchase loans.

Anita it may be the difference between qualifying to purchase a property or not.

Michael in the short time we have had this program we have seen the benefits already.

Nick the 1.5 points is a small price to pay for the huge saving over the life time of the loan in return.

Aug 03, 2014 08:31 AM #5
Ambassador
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Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

George, this is definitely good news for borrowers who don't have enough down payment or want to keep some cash for improvements.  

Aug 03, 2014 10:03 AM #6
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Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

That's awesome, George!  Just wish it went Jumbo, too!

Aug 03, 2014 12:15 PM #7
Rainmaker
2,239,258
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning George. Great option going with LPMI is a good strategy in certain situations. You will be able to guide your clients to make this choice at the right time.

Make it a great week!

Aug 03, 2014 08:12 PM #8
Rainmaker
698,813
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi George, The 1.5% for the interest buy-down is what I would recommend anyway. Five percent gift and 6 percent seller contribution makes this loan available to a lot of people.

My question is "why no PMI?"

Bill Roberts

Aug 04, 2014 12:16 AM #9
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2,737,262
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

It's that 720 credit score that sends otherwise qualified home buyers to FHA.

Oh well.

Aug 04, 2014 12:25 AM #10
Ambassador
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Silvia you are correct and a lower monthly payment helps keep some of there money as well.

Dagny well it is Jumbo every where else in the State except Fairfield County :)

Joe no LPMI, and no Fannie Loan Level Price Adjustments, just the cross the board 1.5 points.

Bill this is a portfolio product so no PMI, because since it is being portfolioed it does not have to follow Fannie Mae rules.

Lenn, one of the main reasons why NO PMI can be offered on this product is because the loan risk is greatly reduce with higher credit scores.  So this is in a way of rewarding Borrowers with good credit.

Aug 04, 2014 01:30 AM #11
Rainmaker
558,091
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Hi George: This is great news to homebuyers with 10 percent to put down instead of 20. No PMI means lower payment. And it does make a difference.

Aug 04, 2014 02:56 AM #12
Rainmaker
4,041,531
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, this program makes sense that it would require a higher credit score with no PMI.    Good to know this program is out there for our excellent buyers.

Aug 04, 2014 03:05 AM #13
Rainmaker
381,465
Randy Mitchelson,APR
iPartnerMedia.com #goipm & Homeland Heroes Home Loans - Bonita Springs, FL
First Impressions are made at First Click

great job with the break even analysis....something I've been doing since day 1 when comparing options...most mortgage professionals can't handle presenting the math like that.

Aug 04, 2014 04:08 AM #14
Rainmaker
381,465
Randy Mitchelson,APR
iPartnerMedia.com #goipm & Homeland Heroes Home Loans - Bonita Springs, FL
First Impressions are made at First Click

And another note....kudos to your firm for taking on a portfolio product with sensible risk...who needs the govt when you have smart business owners?

Aug 04, 2014 04:12 AM #15
Rainmaker
3,015,380
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

George... I love this product and have had numerous clients finance their homes that way with some local lenders.

Aug 04, 2014 05:20 AM #16
Rainmaker
2,704,514
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Hello George,

Now this is a loan choice I can support - you know my low opinion (to put it mildly) of PMI! 

Aug 04, 2014 09:11 AM #17
Rainmaker
3,778,638
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening George,

Wow''10% down and no PMI..this is a wonderful product and great news for buyers looking for a great mortgage!

Aug 04, 2014 11:51 AM #18
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Great explanation of the power of a bigger downpayment. Not only does it make the buying power increase it shows a stronger buyer and more skin in the game.

Aug 04, 2014 01:10 PM #19
Ambassador
3,982,263
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

BTW George, I will reblog this so more people will see it.

Aug 04, 2014 01:11 PM #20
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