When you think of a low down payment home loan chances are an FHA home loan is atop your list. After FHA mortgage insurance costs climbed over the past decade home-buyers sought refuge! Thankfully, the market responded with low down payment alternatives to an Arizona FHA home loan.
3% Down Conventional Home Loan
Arizona buyers seeking low down payment home loans are no longer cornered into an FHA mortgage. Qualified home-buyers have numerous choices in the 3% to 3.5% down payment range. Conventional home loans now offer 3% down as a viable option. Benefits of Conventional financing may include:
- A 3% down payment
- Lower mortgage insurance costs
- Ability to eliminate mortgage insurance later in loan’s life
What’s The Difference Between FHA and Conventional?
There are some noteworthy differences between these two loan options. For example:
- Credit guidelines differ between the two loan types
- Debt to income ratios are typically higher with FHA
- Mortgage Insurance may be eliminated pending equity levels on Conventional
While FHA is still a great option, it is no longer the only low down payment option. All home buyers benefit from looking into all of the available options they qualify for.
3% to 6% Down Can Make All The Difference
Let’s take this one step further! When a borrower in the 3% to 3.5% down payment range stretches to the 5% to 6% range they open themselves up to a larger number of additional mortgage options. In short, buyer’s may be able to eliminate monthly mortgage insurance payments by increasing their down payment up to the 5% to 6% range. Learn more about alternative mortgage insurance options. This can lower a monthly payment significantly.
Your home loan will be part of your financial picture for years. Hastily locking in to an FHA loan could you thousands of dollars over a period of years.
By Jeremy House