Is Smaller Always Better? It Depends!
No, the phrase is actually “bigger isn’t always better,” but in the mortgage world, smaller is the way to go, right? Smaller monthly payments… interest rates… etc. Smaller is always better; maybe not when it comes to down payments on a home purchase.
A few months ago, Fannie Mae reintroduced their 3% down conventional loan. With only a 3% down payment required to qualify for the loan, that means there is a conventional loan program out there with a smaller down payment requirement than an FHA loan (203b needs 3.5% down). That means the conventional product is better, right?
The Answer is in the Comparison
- 3% down conventional: $250,000 purchase price means the loan amount is $242,500. At a rate of 4.75%,