Conventional Loans generally require a 3% down payment. We now offer a 1% Down Payment with Underwriting providing the remaining 2% of the purchase price towards the down payment providing your loan with a 3% equity that you can keep. Ask us about purchasing your primary residence with the lowest down payment available in the marketplace with competitive interest rates and flexible terms. Benefits Of a 99% LTV Conventional Loan This loan option has an incredible opportunity to help with home affordability and several benefits. Chief among them is the ability to put down as little as 1% down to get into a home. Underwriting will cover an additional 2% of the borrowers purchase price as a down payment. Under this scenario, you would acquire your home with 3% in equity. This is available for both first-time and repeat home buyers. There are no restrictions on where you can live or where you move from. The program is available nationwide. What are the 99% LTV Home Loan Requirements As with any mortgage, there are restrictions and qualifications for eligibility. Borrower(s) must meet all conventional home loan requirements for credit score, income and the subject property. Below are a few program specific requirements: Gives you the ability to offer multiple purchase options to borrowers with income at or below 80% of the Area Median Income (AMI) Maximum Loan Amount of $726,200 (2023 Conforming Loan Limits) Follows the same guidelines as Home Possible® Borrower(s) must occupy the property as primary residence. First Time Home Buyer online course required if borrowers have not owned a home in the last 3 years. Borrower(s) may not have ownership interest in any other residential dwellings. Borrower(s) may receive their 1% down payment as a gift. 620+ Credit score required. 50% maximum Debt to Income (DTI) limits Up to a 2% Gift from lender can be used for down payment only (Up to $4000 Max Gift) Sample Calculation But before we go too much further, let’s show a sample loan. We'll use a $250,000 assumed purchase price. This is a 30-year fixed loan with an interest rate of 7% (Estimate only). You bring $2,500 for a down payment (.01 × $250,000 = $2,500). Underwriting covers 2% of the loan amount (.02 × $250,000 = $5,000). Your monthly principal and interest payment is $1,613.36. Qualifying for the 99% LTV Conventional Loan Program Because this is a conventional loan product tied to affordable housing goals, there are several requirements you should know about. Here’s a brief rundown: You can’t qualify if you make higher than 80% of the median income in the area in which you’re looking to buy. For example, if you live in Macomb County, Michigan the area median income is $90,800. You can’t use more than $72,640 to qualify for this ($96,200 × 0.8 = $76,960). You can look up your area's median income with Fannie Mae's lookup tool. You need a qualifying FICO® Score of 620 or better. This is for single-unit primary residences only. When combined with underwritings 2% contribution, your initial down payment can be no more than 5% in total. There's a $350,000 upper loan limit on this conventional option. Although there are income limits, there’s one other important note to make. This is qualifying income. If you can meet debt-to-income ratio (DTI) requirements without using bonus income or putting another borrower on the loan, it doesn’t need to be included in your qualifying income. This could give you some breathing room. Is this really only a 1% down payment loan? Yes, but you get the benefit of going into your loan with 3% equity. In addition to the 1% you bring to the closing table; Underwriting provides a 2% contribution. Are there other low down payment options if I don’t qualify for this program? There are several other low down payment options that may be available to you depending on your situation. For example, if you need to qualify with a higher income, you can still put as little as 3% down on a conventional loan as a first-time home buyer. If your credit score is 580 or better, you can put 3.5% down for an FHA loan. HOW IT HELPS YOU AS A BORROWER We know that the down payment is one of the biggest obstacles home buyers face when they can otherwise afford a mortgage payment. Our 99% LTV Conventional Loan allows you to get a mortgage by putting as little as 1% down and combine that with 2% from underwriting, you start with 3% equity. Get into a house sooner by reaching the down-payment savings goal faster! More money for furniture, house repairs and maintenance This is available to those qualifying with less than 80% of the area median income level who have qualifying credit scores of 620 or better. You can buy a single-unit primary residence nationwide. Does this sound good to you? You can apply online or give one of our Home Loan Experts a call at (800) 655-1635
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