Remember that mortgage insurance benefits the lender
First of all, in a competitive market we see quite often first-time buyers using FHA loans because of their low 3.5% down payment requirements. However, this loan has a couple of major drawbacks.
First, the Private Mortgage Insurance on an FHA loan is attached to that loan for life. So for every $100k you finance on average you’ll pay $85 per month toward Mortgage Insurance.
Remember that mortgage insurance benefits the lender in the event you default, it has no benefit to you as a buyer.
Second, FHA loans have far more stringent requirements for which properties will qualify for these loans. In particular it can be quite difficult to purchase certain condos or townhomes with an FHA loan. Also, we see many multiple offer scenarios in the first time buyer price range under $350,000. As a result we find that seller’s more often than not will choose a NON-FHA offer as they come with more strings attached.
Here are a few of the bullet points around the 100% program offered by Intercap Lending.
• First Time Homebuyer
• Minimum Credit Score of 660
• 100% Financing with no Mortgage insurance
• Maximum total debt ratio of 41% with a Credit Score under 680 and 43% with a score of 680+
• Single Family Residence, Condo, and PUD allowed
Feel free to contact Mandi directly with any questions.