The Return of Private Mortgage Insurance: FHA vs. Conventional
Mortgage insurance is coming back for Conventional loans and it is even being seen in Florida. Up until now you had to put down 10% to get a Conventional loan, it has to be a single family detached home, 41% maximum debt to income ratios, 720 credit scores, etc. All of that is still the same but now you can get a Conventional loan with 5% down AND they have credit tiered mortgage insurance where it can be much more advantageous to get a Conventional loan.
MGIC is offering the credit tiered mortgage insurance and they have a great “Comparison Calculator (http://mgic.com/mgiccalculators/index.html)” so that you can see which loan is best for you. Your Mortgage Professional can put this together for you. Some of the benefits of a Conventional loan vs. an FHA loan is that you don’t have the one time Upfront Mortgage Insurance Premium charge of 2.25% of your loan amount which gets rolled into the loan, typically you can get rid of it after 2 years and once you have 20% equity (http://www.mgic.com/pdfs/71-41599hopa.pdf) where FHA is 5 years AND until you have 22% equity, etc.
If you take a look at the article you will see the change in market share between now and the boom. The good news is that this means liquidity is coming up and markets are stabilizing. There is not telling when you will be able to get a Conventional loan in Florida on condos or attached housing with less than 20% down but this is a step in the right direction.