Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hello! Very confused first time homebuyer here! I will try to break this question out in to two related parts. I am looking for advice from homebuyers and real estate professionals.
Here is my situation: fiance and I are looking to buy an apartment in North NJ, Hoboken to be exact. We have 30K to provide at closing, so assume 20K for a downpayment, appx. 10K for closing costs. The property we are interested in is asking 375K, and has 3 units in the building.
We have received 4 good faith estimates from mortgage brokers and bankers who know we have only 20K to put down, and we have been "pre approved" for a 360K loan, technically meaning we could buy a 380K apartment. I do know that these estimates are not binding, and could go up or down at any time.
So these mortgage pros know that we don't have 10% to put down, but are still pre approving us and wanting to work with us. But I am now hearing that the PMI companies are no longer insuring anything LESS than 10% down on any property. So you can get lots of estimates from lenders that are for 5% or 8% down, but they never get all the way through the process because the PMI companies won't pickup the cost. Is this true? Wouldn't this be a huge waste of time for the lenders?
So with this in mind, our next idea was to go the FHA route, allowing us to put 3.5% down, negating the down payment issue. But now we hear that buildings can only get FHA approval if there are more than 4 units, and most units must be owner occupied. Does that sound accurate, or am I getting bad info?
Naturally, our top choice is in a building with only 3 units. We are assuming that all units are owner occupied, and we know for a fact that the unit we are interested is owner occupied. And it is an old building with an association that has been established for years.
So my two questions are: 1. Is it possible to put less than 10% down in Northern NJ and still get a conventional loan? Will the PMI companies go for this if you have good credit? Or is an FHA loan our only option given the amount we have saved? 2. Is it a hard and fast rule that there must be 4+ units in a building in order to get FHA approval, or is there some wiggle room with this?
Our ideal would be to be able to get this property spot approved for an FHA loan, but we are also very very willing to go with a conventional loan, if we can put less than 10% down.
Program Description: Mortgage Insurance for Condominium Units (Section 234(c)) - HUD (http://www.hud.gov/offices/hsg/sfh/ins/234c--df.cfm - broken link)
Since it looks like I can't get an FHA loan for this condo (only 3 units in the building)...does anyone have any opinions or advice on the less than 10% down payment and the likelihood of actually getting a mortgage with that amount? Again, 20K for down payment, 10K for closing costs. Can I actually get a 360K loan with those numbers? If not, what loan amount would be more feasible, since I don't have any more money to put down...
I have been told you can't do less than 10% for a conventional mortgage. However, can you scape up 10% and then negotiate to have the seller pay closing costs?
Hammester--I'm encouraged to hear you were able to do a conventional with only 5% down. Were you led to believe that this was a special circumstance, and were you given any hassle about it? I am wondering if this is just a case by case thing with no hard and fast rules...
Arielmina--I wish I wish I could come up with the $$ to cover 10% down and get out of closing costs...there's just not enough time! That was my first thought though, and I do appreciate the suggestion.
I do not think it was a special circumstance at all. We had good credit and stable jobs with minimal debt. Ask your lender/mortgage broker about it. It was definitely much better to go this route than FHA. With FHA the rate was a little higher, you had to pay 2-3K up front PMI cost, and you had to pay $150 a month for PMI insurance for 5 years regardless of your LTV ratio.
with these credit scores and if everything else looks good, you should be able to get a conventional loan. We also do not have 20 % to put down, we have a little over 5% and we were able to be approved with two banks, one of them is a credit union. good luck to you.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.