Conventional loans are the most commonly used loan.
In 2023 73% of new single family homes were purchased with a conventional loan. (NAF) Although the minimum down payment requirement can vary from lender to lender, expect to pay a minimum of either 3 – 5% down on your home.
However if you pay less than 20% down on your home you will be required to pay for private mortgage insurance (PMI). Private mortgage insurance is used to protect the lender if the borrower stops making payments on their home. Private mortgage insurance will help pay back the rest of the unpaid loan money to the lender if the mortgage is defaulted on.
This PMI amount is added onto your monthly mortgage payment until you have reached 20% equity in your home, where you can then request your lender to take it off your monthly bill. Your monthly private mortgage insurance payment amount will be determined by multiplying your loan amount by your PMI rate. Then dividing that number by 12. The lower your PMI rate the better.
Your PMI rate will be determined by many different factors including your credit score, down payment amount (higher down payment=lower PMI rate), loan terms (shorter loan=lower PMI rate), Occupancy, loan purpose, loan amount, and other factors.
Information support and collaboration with our preferred lender John Gilfedder. Contact John at: (720) 285-9854 | john.gilfedder@elevationscu.com
