Many people think you need 20% down to get a conventional loan. It has been only 5% down.
Conventional Loan Guideline update:
Guidelines are loosening for purchase Loans
Effective immediately, we now lend up to 97% on conventional loans.
Only 3% down required on conventional loans.
Requirements
SFR (Single Family property)
Owner Occupied
A mid FICO score of 720 or greater is required by both borrowers.
So the pro's and cons of why to go with the 97% conventional vs. the 96.5% FHA loan.
The borrower does not have to be a first time home buyer for 97% financing.
Conventional loans always require two (2) months of cash reserves are not always needed if there are compensating factors. There can be reasons to go with an FHA loan if one guideline kicks a borrower out of conforming guidelines.
If the borrwer does not have a 720 mid score, then going with an FHA loan may be the way to go. With the conventional 97% loan, there is NO upfront mortgage insurance required, unlike FHA loans have an upfront MI factor of 2.25% of the loan amount.
There is a monthly mortgage insurance requirement.
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