Are Lower Down Payment Conventional Mortgages Making a Comeback?

USA Today reported this week that a growing number of mortgage lenders are offering conventional loans with down payments between 5% and 10% as opposed to the standard down payment of 20%. Typically, homebuyers who were unable to meet the standard 20% down payment for a conventional mortgage sought lower down payment options through the Federal Housing Administration (FHA) or the Department of Veterans Affairs. But, with the recent increases in FHA annual insurance premiums within the past two years, Cameron Findlay, chief economist at Discover Home Loans, says that the higher premiums are “causing a shift back toward conventional loans.” Indeed, a trend of more mortgage lenders offering lower down payment conventional mortgages, as reported by Zillow Mortgage Market and LendingTree, may come as a relief to potential homeowners.

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