five things to know about 3% down mortgage

Five Things to Know About3% Down Mortgage

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Many people have outstanding income andperfect credit scores that can help them buy ahouse, but they may not have all the resources,luckily there’s help available. FHA home loanshave become the most popular home loanprogram for buyers who have a low cash reservebecause this particular loan only requires 3.5%down.



Not everyone knows that Fannie Mae offersconventional loans that only require 3% down.These loans come with a 30-year fixed ratemortgage. It is definitely a cost savingsmortgage alternative, but unfortunately it’s notavailable to everyone.



1. What type of house can you buywith a 3% down loan?

You can use your 3% down loan to buy a single-family home, a condo, or a townhouse. Howeverthe house you purchase must be your primaryresidence. Manufactured homes are not eligible.



2. What is the credit requirement?

This particular mortgage program requiresborrowers to have at least a 620 credit score,which makes this mortgage option not only flexibleand accommodating with the low down payment,but with the credit score requirement as well.



3. What is the income requirement?

This mortgage program doesn’t have incomelimits, but it’s important to know that theHomeReady program which is part of the 3%down mortgage programs, does have incomelimits depending on the area. The HomeReadyprogram is slightly different from these other 3%programs, and helps low to moderate incomeborrowers buy a home.



4. Who qualifies for a 3% down mortgage?

The standard 3% down mortgage program is notavailable to everyone. To qualify, someone onthe loan MUST be a first time home buyer.However, to use the HomeReady Program youdo not have to be a first time homebuyer.



5. Am I required to pay privatemortgage insurance?

Since you’re giving less than 20% down payment,you will be required to pay mortgage insurancewith a 3% down mortgage program and with theHomeReady mortgage program. Premiums areusually paid with your mortgage payment. Youcan request that your lender waive PMI (privatemortgage insurance) once you’ve reached 80%equity.



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Justin McHood is Americas MortgageCommentator and has been providing

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five things to know about 3% down mortgage

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