Beacon Lending Home Loans in Denver Colorado

95% Loan with No Mortgage Insurance vs. FHA Loan

FHA has tripled their mortgage insurance premium over the last year and a half to 1.15%. On a $300,000 loan with 3.5%, you will be paying $287.50 a month for a minium of five years, which equates to $17,250. In my opinion, this is a complete waste of money for you to spending.

A much more attractive option is 95% Loan with no mortgage insurance, and upfront ways to buy out the mortgage insurance to avoid the monthly premium. The credit score for this product is a minimum of a 660, which will go up to a 45% Debt to Income Ratio. There are a couple of pricing add ons, because you are buying out the mortgage insurance, so expect a slightly higher rate.If conventional rates are 4.75%, expect a rate of about 5.375%. You are given a higher rate to absorb the mortgage insurance.

Here are some product highlights, for either purchase or refinance

  • 95% Loan with 2-3% minimum coming from the borrowers own funds. The other 2-3% can be a gift from a family member
  • Credit scores to qualify are a 660 minimum
  • Debt to Income Ratios up to 45%
  • You buy out the mortgage insurance with a slightly higher rate, also called Lender Paid Mortgage Insurance (LPMI). There is no monthly mortgage insurance

FHA loans have been red hot the last 4-5 years, however here would be the terms of your $300,000 FHA Loan. You would pay $3000 or 1% upfront mortgage insurance premium on top of your loan amount, you would be paying $287.50 a month in mortgage insurance on top of your payment, for five years minimum. As you can see, you are paying much more for an FHA loan, and in this market, it is worth it to look around, especially at the 95% Loan with no mortgage insurance. You will be able to also qualify for a more expensive home, since you are not having to add in the mortgage insurance to qualify. The only advantage with FHA is a 3.5% down payment, and you can go up to 58% Debt to Income. In my opinion, it is wiser to stick with the 95% Loan, since the terms will be more attractive.

About the Author

Brian Quigley
Brian Quigley
 NMLS# #244003

Brian Quigley has been in the Denver mortgage industry since 2003. Customer satisfaction has been his top priority while guiding clients through the home loan qualification process. He is proficient in all types of mortgage financing including FHA/VA, Conventional, USDA, Jumbo, Portfolio, 1031 Exchanges, Reverse Mortgages, Refinancing, Construction loans, and FHA 203K loans.

View Full Profile

Mortgage Industry News and Information

Delayed Financing and How It Can Benefit You

View >>

Asset Qualifier Loans

View >>

Eliminating Mortgage Insurance in the Colorado Real Estate Market

View >>
1 2 3 29

Join Our Weekly Newsletter

Stay up to date with the latest news from the mortgage industry in Colorado.
Stay Informed and Sign Up

Beacon Lending

NMLS# 2085418
brianq@beaconlending.com
(720) 524-3215
2301 Blake Street Suite #207
Denver, CO 80205

Our office is located in the northwest area of downtown Denver just 1 block North East of Coors Field on Blake Street. Our building sits on the Northwest Corner of Blake Street and Park Avenue West.

Hours

Monday: 8:00 AM – 6:00 PM
Tuesday: 8:00 AM – 6:00 PM
Wednesday: 8:00 AM – 6:00 PM
Thursday: 8:00 AM – 6:00 PM
Friday: 8:00 AM – 6:00 PM
Saturday: 8:00 AM – 6:00 PM
Sunday: 8:00 AM – 6:00 PM
closemap-markerbarscaret-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram