Stacey Lykins
Submitted photo

How can you save $5,000 when you close on your new home and continue the savings for the life of the loan? It is very easy. FHA loans have become more and more expensive, so lenders have come up with conventional options to FHA financing. FHA continues to increase the cost of mortgage insurance premiums, which adds hundreds of dollars to the monthly mortgage payment pricing some buyers out of the market for a new home. Lenders are now offering 3 percent down conventional loans, which do not require 1.75 percent of the loan amount up front.

Here is an example on the purchase of a $300,000 home.

FHA requirements

Purchase price = $300,000

• 1.75 percent up-front premium — $5,066

• Monthly mortgage insurance payments would be $325.68

Conventional requirements

Purchase price = $300,000

• Monthly mortgage insurance is $181.88 for a savings of $143.80 monthly.

• No up-front Mortgage Insurance Premium for an initial savings of $5,066.

• Only 3 percent down.

The good news is this is not a first-time homebuyer program. However, all first-time homebuyers must do homebuyer counseling, which can be done on the phone. With a credit score of only 680 you can put down only 3 percent and with a 620 credit score you only need a 20 percent down payment.

Almost all of the 20 percent can be a gift with only 3 percent required to be your own funds.

Lenders are getting creative for all homebuyers. Take advantage of these new lending programs to buy your first home, move up to a larger home to meet the demands of an ever-growing family or finally buy your dream home. Rates are on the rise and you need to find a way to get the home of your dreams now.

• Ahwatukee resident Stacey Lykins, MBA, is a Realtor with Ahwatukee-based West USA. Reach her at (602) 616-9971, or

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