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You Donít Need a 20% Down Payment to Buy a Home on 3/23/2018

It's a common misconception that all lenders require a down payment of at least 20% of the price of the home. Traditionally, a homebuyer needs to make a 20% down payment to avoid paying Private Mortgage Insurance, or PMI, an additional expense that's of no benefit to the homeowner.

With a mortgage from SLFCU, qualified homebuyers can get a home loan with as little as 5% down in most markets* and only 3% down for first-time homebuyers.

SLFCU has many options for helping members avoid paying PMI.

New Option: One Mortgage, no PMI

SLFCU’s new 5/5 adjustable rate mortgage allows members to borrow their full amount with a single loan, even when they are financing more than 80% of the value of their home.

  • No PMI
  • Low closing costs
  • Less paperwork for a single loan
  • Lower payments because the loan is amortized over a longer term

Traditional Options: A First Mortgage and a Second Mortgage

SLFCU can lend 80% on a first fixed rate mortgage and finance the rest with a 5/5 adjustable rate second mortgage.

  • No PMI
  • Fixed monthly payments for the first 80%

With SLFCU’s “piggyback program,” borrowers can put 80% of their home’s value on a first 5/5 adjustable rate mortgage. The remaining loan amount is financed with a 5/5 adjustable rate second mortgage.

  • No PMI
  • Low closing costs
  • SLFCU’s lowest first mortgage rates

Please call 505.293.0500 or 800.947.5328 to speak to a loan officer about which mortgage option best fits your needs.

Budgeting and Saving

Use SLFCU’s new online and mobile banking to save for your home. Set up a savings goal for your down payment; the system will let you know how much you need to save each month and track your progress. The budgeting tools can help you stay within your spending limits so you can find extra cash to set aside for your new home.

Log in to online banking to get started.

Renting Versus Buying

When determining which choice is right for you, there are many factors to consider, including:

Home price/monthly payment Monthly rent
Closing costs Security deposit
Mortgage rates
Taxes and homeowners insurance Renter’s insurance
How long you plan to stay in your home Opportunity cost (for example, home equity)
Your local real estate market and outlook Your local rental market and outlook
Utilities Utilities (if not included in rent)
Property improvements

There are many free online calculators that can help you review these numbers. Or speak with an SLFCU loan officer about your housing needs and for information about rates and monthly payments. Call 505.293.0500 or 800.947.5328. 

*A 10% down payment is required in California. Effective April 2, 2018, 3.375% (3.966% APR) for 5/5 and 3.875% (4.050% APR) for 5/5 >80%. Rate and payments adjust only once every 5 years. Rate is variable and can increase by no more than 2.0% every five years with a lifetime cap of 5.0%. 4.00% floor rate applies beginning at first adjustment. Maximum loan-to-value is 97%. Rate for the remaining term adjusts every five years and is based on the then current index plus margin, rounded to the nearest eighth of a percentage point, and subject to the floor rate. Index is the one-month average yield of the 10-Year Treasury Note. Rates subject to change; check with SLFCU for current rates. A $45 initial credit report fee applies to all loans. Third party fees may apply in certain circumstances. Additional fees may apply outside New Mexico. Survey fee may be required. You will receive an estimate of closing costs when you apply. Consult your tax advisor regarding the deductibility of interest. You must insure the property that secures the loan. Fees subject to change without notice. If loan does not close, fees incurred will be charged to the member. APR Calculations are based on the following loan amounts for properties located in New Mexico or California: Non-Jumbo: $180,000. All loans subject to credit approval. Contact SLFCU for details.

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