{"id":3971,"date":"2018-03-16T23:28:03","date_gmt":"2018-03-16T23:28:03","guid":{"rendered":"https:\/\/www.michaeladeery.com\/blog\/?p=3971"},"modified":"2018-04-28T21:03:35","modified_gmt":"2018-04-28T21:03:35","slug":"buyers-dont-need-20-down-to-remove-the-pmi-on-a-home-purchase","status":"publish","type":"post","link":"https:\/\/www.michaeladeery.com\/blog\/buyers-dont-need-20-down-to-remove-the-pmi-on-a-home-purchase\/","title":{"rendered":"Buyers Don’t Need 20% Down to Remove the Monthly Mortgage Insurance “PMI” on a Home Purchase"},"content":{"rendered":"

Most home buyers today assume they need to put down 20% to eliminate the monthly mortgage insurance “PMI” on a mortgage. I probably get asked this question as much as any other when it comes to mortgages. With Conventional financing, you only have to put down 5% to remove the monthly PMI on a home purchase up to $685k in San Diego, and $715k in LA and Orange County for example<\/strong>. Instead of waiting to save up more money for the down payment to try and purchase a home while home prices and rates continue to rise, you can put down as little as 5% with this program. Check out how to qualify below.<\/p>\n

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Check out Saturday’s San Diego Union Tribune<\/strong><\/span><\/p>\n

If you read the San Diego Union Tribune, check out Saturdays Home Pride section<\/strong>. I was interviewed for a piece discussing the current housing market for home buyers.<\/p>\n

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Buy a Home With Less Than 20% Down With No PMI for Buyers<\/strong><\/span><\/p>\n

With Conventional financing, you only have to put down 5% to remove the monthly PMI on a home purchase.<\/p>\n

The\u00a05% down Conventional Jumbo mortgage with No PMI is helping lots of buyers finance a home in markets like San Diego, Orange County and LA, where a jumbo loan is needed to purchase a home.<\/p>\n

Each county in California has it\u2019s own conventional jumbo loan limit, click\u00a0HERE<\/strong>\u00a0<\/a>to check your county loan limit, or contact me for more details.<\/p>\n

This program also allows ALL of the down payment to be gifted<\/strong>,\u00a0so buyers can reach out for a gift instead of having to wait and save up the full 5% down payment.<\/p>\n

*If you\u00a0put down less than 10% with FHA<\/strong> financing, you have to pay the monthly mortgage insurance for the life of the loan.<\/strong><\/p>\n

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Purchase a $675k Home With Only 5% Down and No PMI<\/strong><\/span><\/p>\n

Let’s take a $675k home purchase and compare the savings with the 5% down Conventional Jumbo loan with No monthly PMI, versus a Conventional Jumbo loan with regular monthly PMI, and a 5% down FHA Jumbo loan with expensive monthly FHA mortgage insurance.<\/p>\n<\/div>\n

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To calculate the total monthly\u00a0PITI (principal and interest, taxes and insurance), <\/strong>we will use 1.2% of the purchase price to calculate property taxes, which is $675 a month, and $75 a month for homeowner\u2019s insurance.<\/strong><\/p>\n<\/div>\n

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Option #1.<\/span><\/strong>\u00a0The figures on the first column is a conventional 5% down loan with No PMI. The rate is 4.75% on a conventional jumbo 30 year fixed with No PMI.\u00a0The total monthly PITI payment is $4,095.<\/strong><\/p>\n

Option #2.<\/span><\/strong>\u00a0The 2nd option is a conventional 5% down loan with monthly PMI. The rate is 4.5% on a conventional 30 year fixed, the monthly PMI is $298.<\/strong> The total monthly PITI payment is $4.297.<\/strong><\/p>\n

Option #3<\/strong>.<\/span>\u00a0The 3rd option is a FHA 5% down loan with monthly mortgage insurance. The rate is 4.375% on a 30 year fixed rate,\u00a0the monthly FHA mortgage insurance is $543.<\/strong> There is also a FHA funding fee of 1.75% due on all FHA loans, this fee of $11,221 is financed into the loan amount. The total FHA monthly PITI payment is $4,556.<\/strong><\/p>\n

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Option #1 with No PMI will help you obtain the lowest monthly payment.\u00a0It will save you $202 a month over the conventional loan with PMI, and saves $461 a month over the FHA loan<\/strong>.<\/p>\n

As you can see below, over the next 10 years the conventional loan with no PMI will save\u00a0$17,506 <\/strong>over the conventional loan with PMI, and $57,594<\/strong> over the FHA loan.<\/p>\n

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In Summary<\/strong><\/span>. To obtain the lowest monthly payment and the most long term savings, the conventional jumbo loan with No PMI will get you the lowest monthly payment.<\/p>\n

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FAQ’s for the Conventional Jumbo 5% Down Mortgage with No PMI<\/strong><\/span><\/p>\n

Here is a list of frequently asked questions and answers that realtors and buyers have on the conventional jumbo 5% down loan option with No PMI.<\/p>\n

1. What is the maximum loan amount with the Jumbo 5% down program?<\/strong><\/span><\/p>\n

The maximum loan amount with 5% down is $679,650 for for Orange Co and LA County and SF, San Diego is $649,750. You can check your county loan limit HERE.<\/a><\/strong><\/p>\n

2. Can I receive the 5% down payment as a gift<\/strong>?<\/span><\/p>\n

Yes, all of the 5% down payment can be gifted\u00a0on this program. Closing costs and reserves can also be gifted if needed. We can also give a lender credit to help pay closing costs too.<\/strong><\/p>\n

3. What credit score is required to qualify for this program?<\/strong><\/span><\/p>\n

We require a 620 credit score to qualify for conventional financing. A 680 score is required to remove the monthly PMI depending on what your down payment is.<\/strong>\u00a0Please note, the lower the credit scores the higher the interest rate will be.<\/p>\n

4. How do you eliminate the monthly mortgage insurance \u201cPMI\u2019 option on this program?<\/strong><\/span><\/p>\n

It\u2019s very simple. All you have to do is take a slightly higher interest rate than normal, say from 4.5% to 4.75%, and we use a lender credit with the higher interest rate to eliminate the PMI from the mortgage payment. This is also known as lender paid mortgage insurance.<\/strong><\/p>\n

5.\u00a0 Can I get 5% down with No PMI on 2nd homes or Investment Properties?<\/strong><\/span><\/p>\n

No, the 5% down is for Primary Residences only<\/strong>. You have to put down 10% for a 2nd home and 15% down for an investment property. The NO PMI option is also available on both.<\/p>\n

7. Are co signers allowed on this program?<\/strong><\/span><\/p>\n

Yes co-signers are allowed on this program, the co-signer does NOT have to reside in the home.<\/p>\n

8. Is this program for first time buyers only?<\/strong><\/span><\/p>\n

No, this program is available to all<\/u> buyers.<\/p>\n

9. Do condos qualify for this program?<\/strong><\/span><\/p>\n

Yes, you can also purchase a condo using this program with only 5% down and get the No PMI option.<\/p>\n

10. What is the maximum number of units for a home\u00a0with the 5% down payment mortgage?<\/strong><\/span><\/p>\n

The 5% down mortgage is for single-unit homes only. <\/strong>This includes single-family detached homes and single-family attached homes such as condominiums and town homes. 2-unit homes, 3-unit homes, and 4-unit homes cannot be financed with the conventional 3% down mortgage.<\/p>\n

11. What if I put down 10% or 15%, will I get a lower rate?<\/strong><\/span><\/p>\n

Yes, if you put down 10% or 15% as a down payment, you will get a lower interest rate. With conventional financing, the larger the down payment, the lower the interest rate you will get.<\/strong><\/p>\n

If you have any questions about any of these programs or getting approved for financing, please feel free to contact me at 858-442-2686. I look forward to chatting soon.<\/p>\n<\/div>\n

P.S. Please join my Facebook page<\/strong> <\/a><\/span>if you would like to be updated faster on any new loan program changes or industry news.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Most home buyers today assume they need to put down 20% to eliminate the monthly mortgage insurance “PMI” on a mortgage. I probably get asked this question as much as any other when it comes to mortgages. With Conventional financing, you only have to put down 5% to remove the monthly PMI on a home […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[772,759],"tags":[761,760,756],"class_list":["post-3971","post","type-post","status-publish","format-standard","hentry","category-buy-a-675k-home-with-only-5-down-and-no-monthly-pmi","category-buyers-dont-need-20-down-to-remove-the-monthly-mortgage-insurance-pmi-on-a-home-purchase","tag-buy-a-home-with-less-than-20-down-and-no-pmi","tag-buyers-dont-need-20-down-to-remove-the-monthly-mortgage-insurance-pmi-on-a-home-purchase","tag-put-down-less-than-20-and-have-no-monthly-pmi"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/posts\/3971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/comments?post=3971"}],"version-history":[{"count":3,"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/posts\/3971\/revisions"}],"predecessor-version":[{"id":3973,"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/posts\/3971\/revisions\/3973"}],"wp:attachment":[{"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/media?parent=3971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/categories?post=3971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.michaeladeery.com\/blog\/wp-json\/wp\/v2\/tags?post=3971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}