Low Down Pmt Alternative to FHA

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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.

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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:

  1. Credit guidelines differ between the two loan types
  2. Debt to income ratios are typically higher with FHA
  3. 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.

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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

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