When qualifying for a loan, most lenders will look at the Loan To Value (LTV). If a borrower is willing to put in money toward the purchase, this tells the lender that the borrower is not as likely to default on the loan. Basically, the borrower has some "skin in the game." Consequently, the lower the LTV, the more attractive the loan to a lender.
Conversely, a typical FHA loan is 96.5% LTV. That means the borrower only needs to come in with 3.5% down payment in order to purchase the home. This is why the FHA loan is so popular. They have relaxed underwriting guidelines, HOWEVER, they ALL require MI (Mortgage Insurance.) This mortgage insurance can be quite expensive, hundreds of dollars per month. And the only use for this insurance is if YOU DEFAULT on the loan, and the only beneficiary is the lender in case of default. Ideally, I recommend hat borrowers either come in with 20% down, and avoid the MI altogether, or occasionally, it makes sense to do a second lien that will avoid M.I. As mentioned, it can be hundreds of dollars per month, so if the math works out, then it makes sense. Any competent Loan Officer will be happy to run the numbers for you. And if they won't, please... PLEASE contact me directly. I will be happy to put you in touch with a lender that WILL do the math for you.
Best of luck!
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