Buying a home is a complicated process that can quickly cost tens of thousands of dollars out of pocket. While many people desire to own a home, not everyone has the cash to put down a lot of money. Without a down payment of 20 percent, most home loans will require the buyers to purchase private mortgage insurance (PMI).
What Is PMI?
PMI is insurance on the loan for the lender to protect their investment. It can be paid up-front, but it is generally added as a monthly payment to your mortgage. The insurance can quickly increase mortgage payments to dollar amounts that again make homeownership unattainable for some prospective home buyers.
Getting a Loan with No PMI
Fortunately, there are some mortgage lenders that offer loans to home buyers with no PMI and no down payment. For those in Kansas, Arkansas, and Florida, First Fidelis is proud to offer a conventional loan with no down payment that doesn’t require any PMI. As the only lender to offer this special loan, First Fidelis is able to help people who otherwise might not be able to qualify for a loan due to a high debt to income ratio.
The way this works is that without the PMI added to the loan’s monthly payments, a potential homebuyer’s debt to income ratio is lowered. With the lower debt to income ratio, many people who didn’t previously qualify can now get a Fannie Mae mortgage loan.
Most loans require some sort of down payment. Generally, the lowest down payment percentage you will find is three percent. However, these loans are unique in the fact that you don’t need a down payment or PMI to qualify, but there is one big stipulation.
How to Qualify for a Loan with No PMI and No Down Payment
While there are plenty of loans for those with low credit scores, this isn’t one of them. The main caveat for qualification is a credit score of at least 660.
In addition to the 660 or better credit score, you will need the following:
- Two years of tax returns
- A month’s worth of pay stubs or W-2s
- Bank statements and insurance documents
- Photo ID
- Rental history
Once you have provided all of this information, the lender will decide whether or not you have been approved for a mortgage loan. After you have been approved, you can start looking at houses and putting offers out there. If you are working with a realtor, they will be able to help you through this process.
If your offer is accepted, it is time to start the paperwork to make the house yours. If your offer is rejected, you can either walk away from the sale or put in a counteroffer. A counteroffer will go back to the seller and again be either accepted or rejected.
If you are looking to apply for a mortgage without spending a lot of money on upfront costs, this loan might be right for you. To learn more and see if you qualify, contact First Fidelis today at 913-205-9978.