Lowest Down-Payment Ever at 3.5% Soon to be Non-Existent?

My guess? We’ll probably see the end of the FHA’s minimum down-payment program of 3.5% soon. Based on things i’ve been reading and tightening lending restrictions, I think they’re running of out money to loan!

Reports say 21.1% of FHA mortgages underwritten in 2007, 17.3% from 2008, and 4.9% from 2009 are under the category of 90-day delinquencies,¬†bankruptcies, and/or foreclosures. The FHA’s reserve funds has diminished to $3.5 billion as of June 30, 2010, from the $19.3 Billion balance on September 30, 2008.

You can read the full report from SmartMoney.com here.

If you’re thinking about buying and can only afford the 3.5% down-payment, some things you should consider when deciding when to buy:

-Higher Annual Insurance Premiums
-Reduced Limits of Seller Contributions (money towards closing costs)
-Increased Credit Score Requirements

So what happens if you want to buy and the option to use an FHA loan disappears?

-Buying a condo requires a minimum of 10% down
-Anything with less than 20% down-payment WILL have PMI (mortgage insurance, a monthly tacked onto your mortgage payment)
-SOME lenders can do a conventional loan with a minimum of 5%, but it depends on the price and the type of property.

You can email me if you’re interested in what buildings are FHA approved, or if you’re thinking of buying!

One thought on “Lowest Down-Payment Ever at 3.5% Soon to be Non-Existent?

Leave a Reply

Your email address will not be published. Required fields are marked *