Simple answer:
Below $417K 10% down is possible.
Above $417K 15% down in CA,10% down in some states.
*not everyone qualifies*
About 80% of loans these days are sold off to Fannie/Freddie (Phony/Fraudy)
Most people do not understand that BANKS do not lend their money out for 30 yrs. BANKS are mortgage brokers. Loans are sold off to Phony or Fraudie quickly. Banks don’t take risks that rates will go up or down, they make money by originating loans, just like mortgage brokers. Banks don’t usually make decisions, they just follow the guidelines. They do not have the best loans or best service and their employees are often terrible.
For single properties, there are still 2 loan amount tiers. Under $417K and over $417K.
For a conventional loan, to avoid mortgage insurance, you need at least 20% down and a mid credit score of 620. If there is more than one borrower on the loan they use the lowest borrowers middle score. (Scores are not averaged)
There are multiple pricing tiers based on credit score and equity. 659 credit score with 20% down will cost more than a 660 credit score, etc.
With 20%+ equity, the maximum debt to income ratio is now around 50%. (It was 60% a few months ago) This is all monthly debt obligations including the proposed property payment, taxes, insurance, HOA plus minimum monthly payments that show up on a credit report, usually limited to auto, credit cards, student loans. They don’t care about utility bills, auto/health insurance, groceries, gas etc.
The approval system is automated and usually does not care how much you owe, only what the minimum monthly payments are.
For installment loans with less than 10 months to pay, the payment may be removed.
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For loans with less than 20% down the mortgage insurance companies have their own guidelines on top of F/F. Minimum mid credit score must be 720+ and total debt to income maximum 41% (back end)
For loans below $417K, you need at least 10% down. You need to document at least 5% of borrower’s VALID funds if there is a gift of additional funds from a relative. (If the gift is 20% or more, mtg insurance isn’t required so 5% doesn’t need to be documented, but the gift does) Mortgage insurance changes in a 5% increment, so 15% down is a lower premium than 10% down. You also need at least 2 months reserves of the property expenses. If a retirement account is used, they will only figure 70% of the statement balance.
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If the loan amount is over $417K, F/F say that 10% down is OK nationally, however the mtg ins companies still consider some states to be “declining markets” and want an extra cushion, so CA loans over $417K require at least 15% down.
Different lenders have different pricing every day. At the moment, for perfect borrowers, it is still possible to get 30 YR fixed below $417K @ 4.875% with no points or over $417K @ 5.125% OR 15 YR @ 4.25%/4.50%.
5-7 YR ARMS start @ 3.50%..
With a cost, rental properties can get these rates also.
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Condos require at least 25% down for the best pricing. Programs are similar for purchases OR refinancing. Fannie does not allow a co-signer who does not live in the house, Freddie might.
There are hundreds of pages of guidelines.
F/F still offer refi loans up to 125% of the current value, but if you currently have mtg insurance it’s really complicated and may not be available.
Although interest rates are still near historic lows, the smallest % of the population in history actually qualifies today for one reason or another.
Just because payments are made to a bank, it doesn’t mean that the bank owns your loan. They SERVICE the loan.
Programs/guidelines change often. As stated, it’s more complicated than ever and F/F make the rules for their produts, which is the majority of loans today. ARMS & FIXED.
There may be lenders who have different guidelines.
There may be changes/exceptions, and rates change every day. You may or may not benefit from having an impound account for taxes/ins. With only 10% down it may be required.
Your head should be spinning by now. If you want to believe the pricing on a website that doesn’t know your exact credit score you are asking for trouble.
It truly is more complicated than ever to qualify for a loan today and the above is just the beginning…HLS
