3% down going away (for now)

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blog-author-clayjeffreys3

What does a dinosaur, a Dodo bird, and a 3% down payment conventional loan have in common? They are all extinct.

Beginning on November 16, 2013, conventional loans with a 3% down payment will go the way of the dinosaurs and no longer be available. And just like the dinosaurs in Jurassic Park, 3% down conventional loans will come back at some point in time. More on that in a moment.

For those wanting to take advantage of a 3% down conventional loan now, you need to be under contract and have the loan application process started prior to the 15th. You then need to be closed by the end of January 2014. If you meet both of those criteria, and qualify for the loan program, you can still use this program.

Why would someone want to use a 3% down conventional loan? There are several reasons actually:
1. the 3% down payment is less than the minimum down payment for FHA loans.
2. the monthly mortgage insurance payment is roughly 25% less each month for 3% down conventional versus FHA loans.
3. the monthly mortgage insurance is not permanent on conventional loans. FHA mortgage insurance is now permanent under most circumstances.
4. there is no upfront mortgage insurance premium rolled into the loan amount on conventional loans like there is on FHA loans.

As you can see, there are lots of advantages going with a 3% down conventional loan versus an FHA loan if you need a loan with a small down payment and have a qualifying credit score.

About 3% down payment loans coming back from extinction… this loan program has come and gone at least 3 separate times since the housing crisis. More than likely, it will come back again. I don’t know when it will come back, but my guess is it will take less time for 3% down conventional loans to reappear again that it did the Jurassic Park dinosaurs to come back.

If you are looking to buy a home and planned on using a 3% down conventional loan to buy that home, there is still time to use it. Contact me today, and we can get started and get you into that new home with only 3% down.

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