0% down for mortgage still possible?

[feh]

Hi folks.

We're selling our home, and received an offer last night. The realtor claims the buyers are pre-approved, but I was surprised to see that the financing contingency said the loan amount needs to be approximately 95% of the purchase price.

Are such loans still written?

[simpletron]

with FHA, you can still do 3% down or a loan of 97% of the purchase price.

I believe the standard minimum downpayment for a conventional loan is 5% assuming the buyer has good credit and solid income unless you live in place that's had large drops in home prices. in those places, it's a higher minimum downpayment. i'm think of las vegas where a couple of months ago, I read an article about needing 20% down to even be considered for a loan.

[Caoineag]

actually FHA raised the down payment amount to 3.5% instead of the old 3%, but that still isn't much.

[simpletron]

do you know what is screwy with fha is that you didn't have to 3% down under the old rules, just have 3% skin in the game. the actual maxinum loan to ltv ranged from 97.15% tp 98.75% depending purchase price and average closing cost for the state. the 3% skin in game comes from the downpayment and most of the fees in the closing cost.(see ch1 p16). it was easier just to say 3% down because that guarantee you had enough skin in game and put down enough.

I guess hud isn't keeping up with the news because the handbook for underwriting still has the old rules yet say it is current as of feb 2 2009.
HUDClips -> Mortgage Credit Analysis for Mortgage Insurance on One- to Four- (4155.1)
ch1 p7 still has the old ltv, ch1 p31 still has the 3%, and the date at the bottom of the pdf is still october 2003.

[Caoineag]

that doesn't surprise me simpletron, I only know because we were buying a house around the time the change was expected. I think it was December for the change and we closed in November (either way we would have been fine but the bank had to warn us in case it was a big deal).

[momof1in150]

FHA is 3.5%, VA is 0% and the USDA Rural Development program is 0% but the house has to qualify and the lender has to have specific money for that program. You can still get a conventional loan with less the 20% down but you will pay PMI. The days of getting 2nd mortgage for the balance are gone.