All Forum Posts by: Devin Ryan

While this post will be common knowledge for some, it certainly isn't for everyone. I often see everyone recommending FTHBs to immediately look FHA for the "3.5% down payment option" limiting their out of pocket cost. However, there are conventional programs that will give you a stronger offer than FHA, while also allowing you to put only 3% down as well.

The Home Possible (Freddie) and Home Ready (Fannie) programs each allow for borrowers to only put 3% down, while still maintaining the conventional offer. This will save you in the down payment, as well as the extra fees like mortgage insurance on top of this. If you're looking to house hack with a multi-unit property as well, the Home Possible program is also incredibly beneficial. This allows you to still have just a 5% down payment on 2-4 unit property. 

There are some income limitations for qualifying for these programs, but it is certainly one that should be considered for all potential home buyers. There are many programs out there that should be considered and your lender should always be looking out for what makes the most financial sense for your situation. Make sure you're exploring all of these options to put yourself in the strongest position to win! 

This is great news. Also - VA funding fee has a reduction coming April 7th as well.

Original was as follows (first use purchase):

- Less than 5% down - 2.3%
- 5 -10% down - 1.65%
- 10% or more down - 1.4% 

As of April 7th:

- Less than 5% down - 2.15%
- 5 -10% down - 1.5%
- 10% or more down - 1.25%

A little bit of light shining! 

Just to clarify, with 10% down on FHA, it drops off after 11 years now and is no longer based on equity. The 78% LTV changed for FHA in 2013.

Hey @Alex Colby, What @Jon Puente said is great. The temporary buy down programs would generally be where I'm leaning towards at this point in time as it will provide that payment relief until the rates stabilize in a better position for refinancing into.

The only time I'd say differently is if you had a borrower with tight ratios for qualification purposes. With the temporary buy down programs, you're still qualifying them based on the maximum rate, so there are some situations where it's useful. Even there, I would only recommend what is absolutely necessary and wouldn't push beyond that. 

While this may be common knowledge for many people, it's something I've been running into a lot with first time home buyers that I'm working with. Everyone is most concerned with the the number in the interest rate, and I've seen the sticker shock lead to many first time home buyers jumping to want to buy down the rate paying 1-2 points at closing.

While no one can tell you with absolute certainty what will happen with the market, it is expected to be cooling off in the coming 1-2 years and settling back at a more reasonable rate. In many of the cases, when doing the math out for the borrowers, it's shown that it will take 2+ years before the savings in your monthly payment make up for the money you paid in points. 

If the interest rate market goes at it's expected to, you'll likely be refinancing in this time (or roughly in the same timeframe) and you may have cost yourself extra money at closing that you'll never actually recoup. 

Sure, in some cases you might need to take this approach for qualifying purposes, but always make sure you're checking the savings in monthly payment versus the cost of the points to determine how long it will take to gain that return on investment. Don't just look at the rate as the end all be all for what is best for you, it very well may not be in the end. 

@Alfredo Navarrette, please keep in mind that going with a multi-family will allow you to use 75% of the projected other units rental income to help with your qualifying as well. If this is not a factor to you, then please disregard. Additionally, a 203k/rehab loan could absolutely be a solution to your problem of having multi-families that need work. It could be a viable option for you to take. 

Hi Evan, 

This is absolutely a possibility. Certain programs will waive PMI at 15% down that I have seen in my time. Additionally, the lump sum is available for you to pay. Additionally, if you were to put 10% down, you have the option to finance the MI into the loan, which stretched over 30 years significantly reduces the month to month cost. Of course, you can just pay that up front if you wanted too, but I generally see the financed MI as the preferred method.

Hi Chaya, 

Speaking from the lending side, we have worked on plenty of 203k loans. These are a great option for the right property and can allow you to have the home you want with a more affordable starting position. The process of the 203k loan is similar to that of a standard 203b, with the exception of having contractors bids as part of the process. Are there specific questions you're looking to have addressed? 

Hi @Marcus Melendez,

With a VA loan, you would have to occupy the property as your primary residence. You can certainly rent out other units in your du/tri/quad-plex, but at least one must be occupied as your primary residence.

At this point in time, my leaning is to not buy down the interest rate. The current market has been showing signs of cooling, and rates have come down a bit over the last three weeks. Inflation data has finally started to look better (I believe even a little ahead of schedule) and the trending data shows that the rates are going to continue to fall. This all being said, of course it's not a guarantee and if you need to buy down a rate slightly to improve cash flow/ratios, of course you should consider this, just wanted to provide some thoughts.