As many of you have heard of there is a new Conventional loan available. Some banks have called is the “More Home” or “My Community” mortgage. It required a 3% down payment (3% of the sales price) but quickly was found that that conflicted with Fannie Mae’s rules so they made it 5%, just like a regular Conventional loan. So why use it? The biggest difference and benefit for your first-time homebuyers is below and could mean the difference between selling the home and not:
Regular Conventional
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5% minimum down payment. The 5% HAS to be from the buyers own funds, no gifts at all.
Find out what's happening in Waterfordfor free with the latest updates from Patch.
More Home Loan
5% minimum down payment. The whole 5% can be a gift, IF their credit scores are greater than 740 and their debt-to-income ratio is below 41%. If they don’t meet those requirements, the buyer still needs 3% of their own funds, but the other 2% can be from a gift.
Conventional loans carry cheaper mortgage insurance and the mortgage insurance eventually falls off. That’s the main benefit between Conventional and FHA or USDA.
