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We have 800+ credit, good income, but small down due to equity loss in home. Options besides FHA?

We sold our home, need a larger house.  Have some money for down but only approx. 5%. Our credit is great, good income and everything else.  We were told that getting a 1st and 2nd with a low down doesn't happen anymore. Want to avoid paying MI with an FHA - any advice?
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April 03 2010 - Portland
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Answers (19)

MI is now tax deductible, so it really is not something you need to avoid as it was before. 
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April 06 2010

" It is disappointing to see several nay sayers post negative comments who are not informed about the options of this market especially considering they do not even live in this state. "

Steve, since you initially posted only part of the truth and did not describe what you have access to, you open up speculation as to what you really have. If the OP is looking for a home in the $100K-$175K price range then your offer is totally irrelevant. Or, if the OP wants to buy in the price range you offer but you have no properties in the community they want to live in, then again irrelevant. I dont have to live in Oregon to comment on your financing options as we have several banks in Atlanta that found themselves in the same sinking boat, and is the same situation in most of the country. 

"  Really, comments referring to Barney Frank and the like are not productive and do not serve to assist the community in any positive manner. "

If you do not understand the reference to Barney Frank, I suggest you google: barney frank community reinvestment act. then look up how many billions of dollars the taxpayers have paid out to Fannie and Freddie. The financing option that Stephen refers to is exactly those loans. Even though some zip codes enable the use of that financing, I would suggest looking at the resale values, crime rate, and school rankings in those same areas before buying. 

100% financing on a $2M home at 4.875% with no MI is beyond good, why are there any properties still left? Are they overpriced to make up for the financing concessions? Does one need a 20% debt ratio and $500K in reserves to qualify? 

For that matter, given the tax credit offer for 1st time homebuyers on top of their financing offer why does this bank have any inventory left? 




  
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April 04 2010
"There are currently a little over 100 homes in the Portland metro area that apply for the available financing."

Well, we went from "I have a lender who is offering 100% financing at 4.875%" to the truth and full disclosure.  This gives the OP the idea that this is a program available to the general public, which it's not.  Steve, those nay sayers hit it on the head.   They called out your post and then you came back and posted the full truth.  That might have been nice to see the first time.
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April 04 2010
Kirk,

Community Financial is the largest construction lending bank in Portland.  They have financed more new construction homes than any other lender in the Metro area.  When the market turned, they literally had hundreds of new homes sitting completed that were not selling and came up with a creative way to offer their clients (the builders) a competitive advantage that could not be matched by anyone else and help them get their homes sold.  As a result, they offer the following options:

1.  100% financing, 30 year fixed rate of 4.875% with no mortgage insurance.  1% loan origination fee + $750.  Everything else is straight forward.  No gimmicks or hidden fees.  No prepayment penalties.

2.  10% down, 30 year fixed rate of 4.5% with no mortgage insurance.  1% loan origination fee + $750.  Everything else is straight forward.  No gimmicks or hidden fees.  No prepayment penalties.

3.  20% down, 30 year fixed rate of 3.875%.  1% loan origination fee + $750.  Everything else is straight forward.  No gimmicks or hidden fees.  No prepayment penalties.

There is no other financing available in the market which is comparable to this. In addition to the phenomenal rates mentioned above, they offer a job loss protection program.  The details of the program state that if you lose your job, they will pay your mortgage up to a maximum of 6 months and up to $1500 per month.  Depending on your price point, this will not cover the entire mortgage, but it will certainly cover the majority of it.

This program is only available for new construction homes that were originally given construction financing by Community Financial.  There are currently a little over 100 homes in the Portland metro area that apply for the available financing.  The home prices range from $220K-$2million+.  If you let me know what area and price range you are interested in, I would be happy to send you a list of the homes matching your criteria.

It is disappointing to see several nay sayers post negative comments who are not informed about the options of this market especially considering they do not even live in this state.  Really, comments referring to Barney Frank and the like are not productive and do not serve to assist the community in any positive manner.

I am happy to assist in any way which benfits you.

Steve
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April 04 2010
Since William answered my question yes, and Stephen says it is for certain properties, it must be CRA loans, which also have geographic and income restrictions.
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April 03 2010
"Try USDA........ No money down. No mortgage insurance. 30 year fix."

USDA is out of funds.  They are not accepting any more applications; and remember, it does has geographical and income restrictions.
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April 03 2010
Stephen, I am happy for you that you have some unusual financing on specific properties but that is not the norm. Why dont you go ahead and state all conditions of your 100% loan since you brought it up. WTH is an " imaginative personal line of credit" ?
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April 03 2010
Local credit unions and small banks often have unique programs and loans only applicable towards certain properties.  I'm advertising 100% financing on some of my Portland town-homes through a unique Key Bank program. I have sold another property through an imaginative personal line of credit used to fund a home through a credit union that bent over backwards for a client they trusted.  

 In other words, if you are with a credit union or smaller bank, check to see what unique options they might have available.
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April 03 2010
Chip, when Steve starts off saying, " I have a lender..." and then describes something no one else has except with conditions, then he is implying he has a needle in a haystack SO HE WILL GET CONTACTED. If it is USDA he is pushing, then he should include the disclaimers of capped household income, the fact that all properties in Portland do not qualify for a USDA loan, and include the disclosure of paying a funding fee in lieu of MI. Maybe he will come back on here and say whether or not it is USDA he is talking about.  
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April 03 2010

Try USDA........ No money down. No mortgage insurance. 30 year fix.

Avoid mortgage insurance. Mortgage insurance is tax deductible through 2010. Maybe congress will change MI's temporary tax status to permanent, but why take the chance?

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April 03 2010
Yes
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April 03 2010
Steve, is your lender Barney Frank?
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April 03 2010
Hello.  I have a lender who is offering 4.875% interest rate, 30 year fixed, 100% financing...and no mortgage insurance.  What is your price point?    Steve
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April 03 2010
you've got some great and thorough answers here!  But, I just wanted to congratulate you on your 800+ credit score!  That's fabulous  :-)
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April 03 2010
The only way you can avoid paying MI with a small payment is if you buy via one of the following programs:

USDA (cannot own another property and must buy in a rural area)
VA (Must be a veteran)
Homepath (Fannie Mae loan for Fannie Mae foreclosures- see www.homepath.com)
Vendee loan (buying a VA foreclosure using their Vendee financing.  You do not need to be a veteran for this loan but properties are limited)
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April 03 2010

If your loan amount is $417,000 or under you can get a 95% loan with MI. The difference is there is no upfront mortgage premium like FHA's 1.75% of the loan amount. Beginning next Monday the FHA fee goes up another 0.500% to 2.250%. .... Happy funding, Rudi

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April 03 2010
Profile picture for wetdawgs
You are right, the first with a second and low down doesn't happen any more.   Without 20% down, I'm not aware of any way to avoid MI.

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April 03 2010
There is a program that you can put 3% down but you still have MI but it's lower than FHA.
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April 03 2010

Just do an FHA loan, the mortgage insurance is tax deductible unless you make too much money.  

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April 03 2010
 
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