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!