It's never been easier to buy a home with our 3% down payment home loan!
Advantages to our 3% down payment Conventional loan
- The 3% down payment may be a gift from a family member.
- There is no upfront PMI payment with our 3% conventional loan like there is with FHA.
- The loan process and appraisal is not as strict as an FHA loan.
- You do not need to refinance in order to remove the monthly Private Mortgage Insurance aka PMI!
- This means you get to keep your low interest rate and avoid the high cost of refinancing.
- We also offer the HomeReady and HomePossible loan.
- *Restrictions apply. There are other costs to getting a loan. You must qualify for this loan. Please see a list of typical closing costs below and call us for more information.
Disadvantages of an FHA loan
Although we love the option of having the FHA loan, we seldom advise our clients to use it.
- With FHA, there is a very large upfront mortgage insurance premium added to the loan. This fee is not refundable.
- The monthly Private Mortgage Insurance (PMI) cannot be removed without refinancing.
- When you refinance an FHA loan, you have to qualify and re-apply for the loan.
- When you refinance an FHA loan, you lose your original interest rate and may have to take on a higher rate.
- Why do other lenders encourage you to use an FHA loan?
- most lenders do not offer a Conventional 3% down payment option.
- They make money by selling you another loan in a few years because you will want to get rid of the PMI! They also move your loan to the current interest rate.
Typical closing costs averaged
Typical closing costs on a conventional loan:
- Underwriting fee $200 – $1100 (we often offer a lender credit that can be applied to this fee)
- Appraisal fee $ 525 – $650+ (could be waived on a refinance and could be higher on a newly constructed home)
- Credit Report $31-$47 (per credit report)
- Tax Cert, Credit Monitoring and Flood cert & other fees, combined total $50 – $115
- Title Insurance Commitment, search fee, closing fee, etc.. This is difficult to estimate because it is a third party fee & is determined by the Title Company you choose and is based on your loan amount.
- Transfer tax – is a tax charged by your county & is determined by your local tax rate.
- Homeowners Insurance – One year is paid in advance at closing. You will choose the company and the cost will vary.
- Initial Escrow account ( this is basically a savings account the lender keeps for you so they can pay your taxes and homeowners insurance annual bill) – The cost of each will depend on the home tax assessed amount and the homeowners policy you choose. You will need to start your escrow account with several months payment in advance.
- Prepaid interest – When you close on a home, you will pay for the per day interest charge for the days remaining in the month that you close on your home. “Close” on your home is the day you take ownership of the home. Your first mortgage payment will be due the first day of the month following your closing, because you pay your mortgage in arrears.
- There may be other fees not listed. This is not an official loan estimate. To receive a loan estimate, please contact us.