The 97% loan-to-value (LTV) purchase program allows homebuyers to purchase a single family home, condo, co-op, or PUD without coming up with a full 5% down payment as previous guidelines mandated. Now just a 3% down payment is needed. That’s even lower than FHA requires.
Now that conventional 3% down loans are a reality, buyers have a real alternative to FHA. While the FHA loan has its benefits, it comes with high upfront fees and permanent mortgage insurance.
The new conventional 97% LTV program is a safer bet for the future, requiring no upfront mortgage insurance fees and cancellable monthly PMI.
The new 3% down loan is similar to existing conventional loan programs. Rates are low and the program is available!
Many of today’s home buyers will meet guidelines for this new loan option. Three percent down loans with the following characteristics will be considered for approval:
These features align well with the typical first time homebuyer’s profile. For instance, most buyers today are looking for a one-unit home (as opposed to a duplex or triplex), or a condo that they plan to live in as their primary residence.
Today’s average home price is around $250,000 according to the National Association of Realtors, putting most homes nationwide in reach with just a 3% down payment.
Many homebuyers assume they need impeccable credit scores to qualify for a loan that requires just 3% down. That’s not the case.
According to Fannie Mae’s Loan Level Price Adjustment (LLPA) chart, a borrower can have a score as low as 620 and still qualify.
What’s even more impressive when reviewing the LLPAs is that some borrowers will receive the same or lower rate for a 3% down loan compared to those with 20% down.
For instance, a borrower putting 20% down (80% LTV) and a 660 score will receive a rate increase of about three-eighths of one percent because of their credit score and LTV combination. The same borrower who puts 3% down will receive approximately the same rate.
That does not make sense at first, until you realize that mortgage insurance takes risk off of Fannie Mae and the lender. If the borrower defaults, the mortgage insurance company reimburses the owners of the mortgage. The 20% down loan does not require PMI, but the 3% down loan does.
The mortgage insurance would make the 3% down option more expensive on a monthly basis. However, the borrower’s down payment requirement is substantially lower, allowing them to buy a home much sooner, or buy at all.
And remember that non-FHA mortgage insurance is cancellable. When the loan balance reaches 78% of the property’s value, PMI automatically drops off.
Homeowners who choose the conventional 97% LTV loan option will end up with a great fixed interest rate, and after paying down the loan balance, no more PMI.
Mortgage rates for the 3% down payment program are based on standard Fannie Mae rates, plus a slight rate increase.
But these loans will come will come with rates only about a one-eighth to one-quarter of one percent higher than rates available to borrowers putting 5-10% down.
The fee or rate increase is minimal compared to the value added from earlier home buying.
Someone buying a $250,000 home would pay about $60 more per month by choosing the 97% loan option compared to a 5% down loan.
Yet, the buyer reduces their total upfront home buying costs by over $5,000.
The time it takes to save an extra 2% down payment could mean higher home prices and tougher qualifying down the road. For many buyers, it could prove much cheaper and quicker to opt for the 3% down mortgage immediately. You can click on the button below or apply online; if you prefer to speak with one of our Home Buyer Experts, we would be happy to speak with you at 888-259-2257.
florida mortgage, florida mortgage rates, florida mortgage claculator, florida mortgage broker, florida mortgage lender, florida mortgage compamny, mortgage broker near me, mortgage brokers near me, orlando mortgage, orlando mortgage rates, the villages mortgage, the villages mortgage rates, the villages mortgage lender, the villages mortgage broker, naples mortgage, naples mortgage rates, naples mortgage lender, naples mortgage broker, florida keys mortgage, florida keys mortgage rates, florida keys mortrgage lender, florida keys mortgage broker, cape coral mortgage, cape coral mortgage rates, fort myers mortgage, cape coral mortgage lender, cape coral mortgage broker, fort myers mortgage rates, fort mayer mortgage, fort myers mortgage lender, fort myers mortgage broker, sanible island mortgage, sanibel island mortgage rates, sanibel mortgage lender, sanibel mortgage broker, anna maria island mortgage, anna maria island mortgage rates, anna marie mortgage lender, anna maria mortgage broker, clearwater mortgage, clearwater mortgage rates, clearwater mortgage lender, clearwater mortgage broker, bonita springs mortgage, bonita springs mortgage rates, bonita springs mortgage lender, bonita springs mortgage broker, marco island mortgage, marco island mortgage rates, marco island mortgage lender, marco island mortgage broker, st. augustine mortgage, st augustine mortgage rates, st. augustine mortgage lender, st. augustine mortgage broker, st. augustine beach mortgage, st. augustine beach mortgage rates, st. augustine beach mortgage lender, st. augustine beach mortgage broker, tampa Bay mortgage, tampa bay mortgage rates, tampe bay mortgage lender, tampa bay mortgage broker, st. petersburg mortgage, st. petersburg mortgage rates, st. petersburg mortgage lendser, st. petersburg mortgage broker, bradenton mortgage, bradenton mortgage rates, bradenton mortgage lender, bradenton mortgage broker, bradenton beach mortgage, bradenton beach mortgage rates, bradenton beach mortgage lender, brandenton beach mortgage broker, sarasota mortgage, sarasota mortgage rates, sarasota mortgage lender, sarasota mortgage broker, longboat key mortgage, longboat key mortgage rates, long boat key mortgage lender, long boat key mortgage broekr, key west mortgage, key west mortgage rates, key west mortgage broker, key west mortgage lender, key largo mortgage, key largo mortgage rates, key largo mortgage lender, key largo mortgage broker, isalamorada mortgage, islamorada mortgage rates, islamorada mortgage lender, islamorada mortgage broker, big pine key mortgage, big pine key mortgage rates, big pine key mortgage lender, big pine key mortgage broker, marathon fl mortgage, marathon fl mortgage rates, marathon fl mortgage lender, marathon fl mortgage broker, upper keys mortgage, upper keys mortgage rates, upper key mortgage lender, upper keys mortgage broker, lower keys mortgage, lower keys mortgage rates, lower key mortgage lender, lower keys mortgage broker, apalachicola mortgage, apalachicola mortgage rates, apalachicola mortgage lender, apalachicola mortgage broker, st. geoerge island mortgage, st. geoerge mortgage rates, panama city mortgage, st. geoerge island mortgage lender, st. geoerge island mortgage broker, panama city mortgage rates, panama city mortgage, panama city mortgage lender, panama city mortgage broker, panama city beach mortgage, panama city beach mortgage rates, panama city beach mortgage lender, panama city beach mortgage broker,
Fidelity Home Group
4700 Millenia Blvd Suite 175, Orlando, FL 32839
Hours of Operation:
Monday - Friday 8am to 7pm EST
Saturday - Sunday 10am to 6 pm EST