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FHA/3.5% Down Purchase/Refinance Loans

3.5% down loans are very popular.  These loans are good when you don't have a big downpayment saved for the purchase of your home, (or if you don't have much equity built up when refinancing).  

3.5% down programs allow you to buy your home now, instead of waiting to save enough for a big down payment.  Some customers even prefer putting as little down as possible, in order to keep their savings in the back for home repairs or remodeling, or as an emergency fund instead of depositing it down on their purchase when they don't necessarily have to do so.

There are several options available for buying a home with just 3.5% down.

  1. Get one new loan at 96.5 percent loan-to-value (LTV). PMI is usually required, and the insurance charges are sometimes tax deductible (consult your tax advisor for details).
  2. The 3.5% can come from your savings, a gift from family or friends, or one of the community grant programs available in your area.  And, the seller IS allowed to pay most of your closing costs for you!
  3. Get a new first loan and have the seller carry back a second loan for the balance of the purchase price.

PMI is an additional charge you sometimes must pay in your monthly payment if you make less than a 20 percent down payment. This insurance policy protects the lender in the event of a payment default or foreclosure, and the loan is not paid off in full.