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Fannie Mae Lowers Down Payment Needed On Conventional Loans
If you haven't heard Fannie Mae has lowered the down payment needed for the DC area on Conventional loans between $417,000 and $625,000. That means the $450k -$650k housing price range is affected positively. Since our median home price is around $500k, this works tremendously well with our marketplace.
Previously, if you wanted a conventional loan, the minimum down payment on loans over $417,000 was 10% of the purchase price. Now it is only 5%!!! For example, on a $500,000 home, the down payment needed went from $50,000 to $25,000.
FHA down payment requirements are still 3.5% of the sales price, however Conventional loans offer additional and usually more affordable options and strategies regarding mortgage insurance. Below is an analysis comparing the two loan programs.
This will have a positive impact for buyers and sellers this year. The important take-away here is simple:
Key differences between FHA and Conventional:
FHA min down payment = 3.5%, Conventional is now 5% up to $625,500…was 5% down on loans $471k or lower already.
Conventional rates are a bit higher, but the PMI is lower and more flexible. There are different ways to structure PMI based on client goals. FHA is a one size fits all program.
Conventional rates are much more affected by credit score. Because of this, if credit is not perfect, many times the FHA could be much lower in rate.
Thank you Sean Glennon for this update!
Melody Hall Visser is a passionate Realtor who lists, sells, and dwells in Northern Virginia. Currently, she serves as a REALTOR at eXp Realty, LLC. As a life-long resident of Virginia, Melody has....