Posts Tagged ‘FLEX 97’

3% down going away (for now)

November 5, 2013


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.



Small down payment loan options

March 13, 2013

With yet another round of FHA mortgage insurance premium increases set to begin on April 1, 2013, many people think their only option of buying a home with a small down payment will just have to coincide with a ridiculously high monthly mortgage insurance payment.

What many people are not aware of is the fact that conventional loans have a program that requires only a 3% down payment. You will need a higher credit score than an FHA loan, but the down payment is actually smaller than an FHA loan. Also, you can get approved for conventional loans with as little as 5% down. Let’s talk these loan programs.

As we have recently discussed, FHA loans only require a 3.5% down payment. The drawback in the monthly mortgage insurance. Starting April 1st, all new FHA loans will have a 1.75% up front premium rolled into the loan amount. Also, the monthly mortgage insurance will increase to 1.35% of the loan amount. The mortgage insurance payments will be permanent unless you make a 10% down payment when you buy the home. The advantage of FHA loans is that your credit score can be as low as 640, but it comes at a cost of a REALLY high monthly mortgage insurance payment.

Conventional loans with 3% down do require higher credit score of 700, but you do get by with a smaller down payment. That isn’t the only thing that is smaller. The monthly mortgage insurance rate is only 1.15% of the loan amount. Also, there is NO upfront mortgage insurance premium rolled into the loan amount. If you have a qualifying credit score, this program comes with a smaller down payment, no upfront mortgage insurance premium, and a lower monthly mortgage insurance rate.

Conventional loans with 5% down only require a 660 credit score. The down payment is higher than an FHA loan, but again, there is no upfront mortgage insurance premium. Even with a 660 credit score, the monthly mortgage insurance will be less than an FHA loan. If you have a credit score in the 700s, the monthly mortgage insurance could be half as much as an FHA loan.

Whether you are a first time home buyer OR just someone looking to buy a home and need a small down payment, you have options other than an FHA loan. You can qualify for a conventional loan with as little as 3% or 5% down. In both cases, the monthly mortgage insurance will be less than an FHA loan. There is also no upfront mortgage insurance premium being rolled into the loan amount.

With all of the changes taking place to FHA loan, conventional loans are becoming more and more attractive. If you haven’t discussed a conventional loan with your mortgage broker, you should. If you are buying a home in the state of Georgia, contact me* and we can discuss it today!

* scroll down to the bottom of the page for my contact information


3% down conventional loans are back!

November 22, 2010

It has been about two and a half years since a conventional loan was available in Georgia with less than a 5% down payment. Those days are gone with Fannie Mae now allowing the FLEX 97 loan program.

Borrowers looking to buy a home who didn’t have a 5% down payment, but great credit, had to go with an FHA loan. Now I’m not saying FHA is a bad program (it definitely isn’t), but it does have that pesky up front mortgage insurance fee that is rolled into the loan amount. Since the FLEX 97 program is back, borrowers only need 3% down to go with a conventional loan and can avoid paying the up front mortgage insurance required on FHA loans.

Outside of the standard documenting of income, assets, etc., to qualify for the FLEX 97 loan program, one needs to have:

  • 3% down payment (FHA requires 3.5% down)
  • credit score must be 700+
  • purchase/refinance for primary residence only

Some of the advantages of using the FLEX 97 conventional program:

  • only need 3% down
  • no up front mortgage insurance premium required
  • allows borrowers with 700+ credit to obtain a lower total monthly payment using FLEX 97 instead of an FHA loan
  • loan amounts up to $417,000 instead of $346,250 (the max FHA loan amount for metro ATL counties)

As you can see, there are several advantages to using the FLEX 97 loan program for borrowers that qualify. Do you need to know if you qualify for this loan? If you are in Georgia, contact me and we’ll get started!