Well, the era of a conventional 97% loan was fun while it lasted, huh?!?!?
Fannie just announced that by the second week in November, during the latest version of their DU update, the highest loan to value and total loan to value they will offer will be 95% So, does this mean there are no longer any loans available that don't require a 5% down payment? No, actually, there are still a handful left that will still go up to 100%, but those are niche products that not all of us will qualify for and include a VA loan or Rural Development loan. FHA is still around and is still only requiring a 3.5% down payment, but as noted in prior blog postings, that can easily be an expensive path to take for home ownership. I would highly suggest you ask your mortgage professional to map your scenario out on paper so you can see all the numbers involved to make an educated decision as to the best way for you to go. You may find that the extra expense at closing and monthly with the FHA product will become more expensive than the additional 1.5% down payment on the conventional product.
The minimum down payment was not the only change that will be coming with the upgrade in Fannie's software that is coming in November. For a more detailed look at what will be included in all the changes, you can see the official memo here.
I expect this to be rolled out like changes in the past have and that is you must have made loan application or locked your rate in before the deadline comes to be grandfathered in. If you have applied and locked your rate before the deadline, my suggestion would be for you to watch your rate expiration very closely because if/when your rate expires, you will most likely not be able to keep your grandfathered status.
One more way to help you manage your mortgage.