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Which mortgage option best suits my scenario?

Greetings!
  My wife and I are interested in purchasing a home.  We have been searching for several years now, with a few bad experiences.

  We currently have a combined yearly gross income of $122,000.  Our DTI ratio is 10%.  Our credit score is solid.  We have enough of a down payment for 3.5% - 5% of a $225,000 loan.  The seller would need to pay closing costs.  The target monthly payment would be around $1,500 including taxes and insurance, with some room to grow.  We do not currently own a home, nor do we rent.

  What is our best option?

  Thanks in advance!
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January 10 - Simsbury
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Answers (9)

Hello! Great question, send me a message and I'll see if you qualify for a USDA loan. This would mean NO MONEY DOWN and even finance the closing costs. A lot of people in CT don't realize the home they're looking for qualifies, but I would be more than happy to help you out with that. 
You also may want to look at a no PMI loan. Some lenders, like the one I work for, can get you a no PMI loan with only 5% down. Hope this helps!
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January 12
Well you income, DTI, and credit look great. The one thing that will limit your loan options is your down payment. With that down payment your best options would either be an FHA or conventional. An FHA loan only requires 3.5% down along with closing costs. On the other hand, the conventional requires 5% down along with closing costs. You should research these loans to see which would be the better fit for you. Either way, the best thing for you to do is to speak with a lender directly to see if you can get started on financing with your situation. There are lenders like myself that would be glad to speak with you to help you get the loan that you need. If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
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January 10
I agree with Joe, get with a Lender now to work out all fund details and for a PreApproval. In addition to getting a Seller Concession to pay Closing Costs and Prepaids, you can also take a higher interest rate and get a Lender credit so you may cover all Settlement Charges ( excluding the down payment ) that way.     
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January 10
Important to talk to a licensed professional so you can see everything side by side and be able to make the best possible decision.  They should be able to provide a pretty accurate estimate of closing costs so you know what is going to be required either out of pocket or in your offer to the seller
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January 10
Profile picture for Tinlizzy15
 Thank you all so very much for the information so generously given.

  To answer the question of:
"Will a 5% down payment empty my liquid assests?"

  It will leave us with roughly $4,000 in the bank accounts.

  I look forward to some more compound advice!
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January 10
FHA and conventional are both options. Conventional 5% down you can get $6750 in seller concessions (assuming a 225k purchase price). FHA you can get $13,500 in seller concessions. Keep in mind, in addition to your down payment you will have title insurance fees, transfer taxes, prepaid escrows, origination, any points, as well as an appraisal/inspection & more. 

I never recommend someone empty their account to buy a home. That said, you would be much better off in the long run with a conventional loan assuming a good credit score. My advice would be to wait until you have a bit more in reserves, put 5% down and get a conventional loan either with monthly mortgage insurance or lender-paid MI. 

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January 10
Provided your credit score is good the conventional loan is the way to go.  The one reason to go with a FHA is if a 5% down payment would exhaust your savings or if the closing costs exceed 3% of the sales price.  With a conventional loan you are only allowed the seller to pay 3% of the sales price towards closing.  FHA will allow for more.  Depending on the property taxes, I would think $1500 is in the ball park.  If you would like to contact me through my profile, I would be happy to help
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January 10

Hello,

You should get a side by side comparison of an FHA home loan 3.5% vs. 5% down conventional and see what best fits.  Really look at both programs as your assets should be taken into consideration.  Would putting down 5% use up all your assets as you mentioned that you would want the seller to pay for your closing costs, which I am not against.  Take a look at everything not just the down payment!

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January 10
30 year fixed conventional loan 5% down payment required If you need to lower down pmt - then use a FHA loan ( this will have higher mortgage insurance fees though) If you have access to a va loan - use this If you can locate a home presently owned by fannie mae - use homeopath loan program
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January 10
 
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