Conventional Loan

3 Replies

Does every conventional mortagage loan requires a 20% down payment? If not, what are some options around it?

Not every conventional loan require a 20% down.  Lender usually require a mortgage insurance when purchasing a property with less than 20% down.  So theoretically you can purchase a property with 10% down.  Only condition is you'll have to pay monthly mortgage insurance.  

Once the unpaid principle balance is less than 80% of the original loan amount, you can request monthly mortgage insurance be removed.  Or when unpaid principle is less than 78%, lender is supposed to remove the mortgage insurance automatically according to Homeowner Protection Act.

Another way around 20% down is to go FHA. FHA allows 3.5% down. However, you'll have to pay upfront mortgage insurance premium at 1.75% of loan amount plus a monthly mortgage insurance premium.

100% financing is available for military through VA loans or USDA loans.

Just my 2 cents / opinion.

FHA requires the home to be your primary resident correct? Can it be used for investment property?

Regular FHA loan is for owner occupied, primary residence.

Some creative way to do this is through house hacking.  If the property is 2 bed / 2 bath, you can get a room mate.  Or if it's a duplex building, then you can live in one unit and rent out the other unit.  Or if it's a single family residence with mother in law unit, one can rent out the mother in law unit.

Just my 2 cents.

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