You probably already heard that FHA just cut their rate for the monthly MIP for the borrower by 50bps. This is great for consumers that need FHA financing!
With the change, I was thinking that now is a good time to review financing options for your buyers with minimal down payment.
FHA – 3.5% Down Payment
For a buyer purchasing a $250,000 home, the borrower will save about $100 per month due to reduced MIP in effect as of today!
By the way, FHA rates are also typically lower than conventional loans with 3-5% down payment.
Also, a buyer with a prior short sale can typically buy a home after 3 years using FHA Financing.
Conventional – 3% Down Payment
If at least one of the buyers is a first time homebuyer, and has a FICO as low as 620 they may be able to buy a home with only 3% down payment.
Unlike an FHA Loan, there is no Upfront Mortgage Insurance premium, and the monthly premium is not for the life of the loan.
Many times, this makes more sense than an FHA Loan.
(The definition of a First Time Homebuyer is a buyer that has not owned a home is the past 3 years, which makes this program open to most buyers.)
VA – NO Down Payment
Don’t forget to ask your buyers if they are a Veteran. If they are an eligible Veteran, they may be able to purchase a home with no down payment.
It is entirely possible to structure the deal in a way that the buyer could need very little money to become a homeowner.
