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Profile picture for pavlatm

Anything under 20% requires FHA?

Ive been working with a lender and originally, in my priority buyer letter, the numbers lined up like a conventional loan. However, when he sent me disclosure papers a week later, the loan type he checked off was FHA.

I've asked specifically if there was a way around FHA if I put less than 20 percent down and he indicated this was not possible. 

My plan was to put down 5 percent and go Conventional. Is this not possible?

My credit score is 757, and my monthly income is over 9k. Im buying a relatively inexpensive property (179k), and I think my debt ratios are good. No bankruptcy, judgements, etc. Is FHA the only way?
  • February 09 2014 - Humble
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Answers (21)

You can do a purchase with 5% down with a conventional loan. Inbox me if you have additional questions. Thanks!
  • February 13 2014
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You can put down 5% on a conventional loan and from what you say you are very qualified to do so.  Most lenders can approve buyers with as little as 3.5% down payment for an FHA product.  Generally 5% down is fine for a conventional loan.  That lender may not have access to a variety of loan options. 

  • February 12 2014
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It is possible, just maybe not with your current lender. There are conventional loan products that lenders like myself offer that can be done with down payments as low as 5%. Your current lender may not offer this same product. There are also 10% down conventional loan options available, just with other lenders. The best thing for you to do is to speak with another lender such as myself to see if you can get started on financing a new home with a 5% or 10% down conventional. If you have any further questions or if you would like a loan, feel free to contact me. Either way, the best thing for you to do is to speak with a lender such as myself to see if you can get started on financing a new home. If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • February 12 2014
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Profile picture for pavlatm
Hey guys, thanks for your replies.

I am now working with a new lender that has resolved the issue. He is mildly shocked to say the least. Thankfully the responses I received here kept me looking into the matter and a hunch turned out to be correct. 

Thanks.
  • February 10 2014
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With your credit score you should have no problem with a 5% down conventional. Now you said your debt ratios are good but that could be the only reason I would see pushing FHA because they allow higher debt ratios. Try another lender in your area to see what they say.

I hope this helps

Imelda
  • February 10 2014
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That should be a piece of cake to do as a conventional loan.
  • February 10 2014
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It seems you would be able to do conventional.  But sometime there are issues that make FHA the only option.  I would be happy to reveiw.
  • February 10 2014
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A little more detail is needed to be sure to direct you correctly but there are 5% conventional loans out there, it may just be that his office cannot offer it.  But regardless you would benefit with going conventional before FHA with more funds down.  Your credit score is high enough to do this.  I would definitely consult another office, good luck.
  • February 10 2014
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Send me your contact number to call you and provide you all the Options

  • February 10 2014
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Profile picture for USMortgageRanger
As a direct lender we do offer a Conventional mortgage with 5% down payment and other strong compensating factors as good score good DTI and yes this is a portfolio mortgage that offer a variety of ways to structor. I can be reach via my profile.
  • February 10 2014
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Profile picture for RealEstateCrew
May not be possible for his bank but there should be other banks out there that can help you with the product you are looking for, may need to shop your mortgage a little more. 
  • February 10 2014
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Yes you can go with a conventional loan with as much as 5% down, it would be helpfull to know more thorough details of your situation, but the short-quick answer is yes!..  It might be a good idea to speak to another lender and let them know your situation

Hope that helped a little, please feel free to reach out and good luck..!!
  • February 10 2014
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Profile picture for funds2
In your case it would appear that FHA is the loan of last resort. Rate on FHA may be lower but MI is about double and for life of the loan.  Have no idea why loan officer is pushing FHA, but after your conversation if you want a second opinion contact me thru my Profile in Plano.
  • February 10 2014
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Profile picture for JustinLeffew
Find a different lender. End of story
  • February 10 2014
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5% down is very much available.....   Even with much lower credit scores.
Time for a second opinion.....
  • February 10 2014
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Is it a single family or two+ family?
  • February 10 2014
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Sounds like amateur night at the lending office
  • February 10 2014
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I premise that I am not a mortgage broker. My suggestion is that you consult a different lender and compare what both can offer you. I know that my clients have obtained conventional loans with 10% down payment and mortgage insurance. There are many reasons why FHA can sometimes be a better choice than conventional, debt to income ratio being one for example but only someone who knows your specific situation can suggest you the best loan for you. Also ask your current lender to explain you why he thinks FHA is the best choice for you. Never hesitate to ask.
  • February 10 2014
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Profile picture for pavlatm
Im also concerned about a couple of entries on the disclosure,.

For instance, there are entries of joint accounts on the form (only listed once), however, one particular entry is listed twice, and it is a pretty big sum which I proposed paying off immediately before going through this process. The lender suggested I shouldnt. 

Now, this is before the disclosure was sent to me. I plan on speaking with him tomorrow to find out why this one listing shows up twice, and why its a bad idea to pay it off. He mentioned something about more liquid assets, but Im getting the feeling that something isnt right.
  • February 10 2014
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Profile picture for pavlatm
A house.

Just a normal 2 story residence. 179k, good shape, 2004 built, etc.
  • February 10 2014
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Profile picture for Brookstone Mortgage
What type of property is it?
  • February 10 2014
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