There are many people that still think you need a large down payment saved up to be able to buy a home. This is simply NOT true! There are so many affordable loan programs out there now days. There are 3% down programs like Home Ready and Home Possible, there is the FHA loan that only requires 3.5% down, and there are even programs that require 0% down like Utah Housing and USDA. There is another loan program similar to these that is not as well known. All of these programs have their pros and cons, but this program in particular is extremely underrated and underused. It is known as the conventional 3% down program.
What is the Conventional 3% down program?
Most people think that in order to qualify for a conventional loan, you have to have a minimum of 5% for a down payment. What they don’t realize is that there is another option! The conventional 3% down loan program is a great option for first time home buyers and home buyers who haven’t owned property for a few years. There are many benefits to this program besides just the low minimum down payment.
- Qualify with a credit score as low as 620
- No front-end private mortgage insurance is required
- Mortgage insurance is automatically removed when you pay your loan down to 78% of home value
- A friend or family member can gift the down payment to the borrower
- Higher maximum loan amounts are allowd
Am I eligible for this loan program?
To be eligable for this loan program your loan must meet the following criteria:
- Debt to income ratio of 43% or less
- Minimum credit score of 620
- One of the borrowers must NOT have had ownership in a house in the past 3 years
- Only eligible for owner-occupied buyers, no investors or non-occupying co-signers
If you are a first time home buyer, the conventional 3% down program is a great option for you! If you are not, that’s OK! There are so many affordable loan programs out there that you can rest assured we can help you find the one that is right for you. If you are wondering if you qualify for this loan program, or are just wondering what financing options you have, please contact one of our mortgage professionals today! We would be happy to assisting you in helping you find the program that is best for you!