Conventional Loans Conventional loans offer the best interest rates and are designed for solid borrowers with good credit, income, assets, and job history. The minimum down payment is 5 percent, but the more money a borrower puts down, the less private mortgage insurance (PMI) he or she will have to pay each month. 30-Year and 15-Year Fixed Mortgages These are the most popular loan programs. The loan interest rate is fixed for the 15- or 30-year life of the loan, with 15-year loan rates running about 0.5 percent lower than 30-year rates. Lenders require a minimum 5-percent down payment and private mortgage insurance (PMI) coverage. The amount of the PMI payment is dependent upon how much the borrower puts down. If the borrower puts 20 percent down, he or she will eliminate the mortgage insurance requirement. To determine the difference between a 15- and 30-year mortgage payment, contact one of our loan counselors at (916) 635-6737. 7-Year, 5-Year, 3-Year Adjustable-Rate Mortgages Many home buyers choose an adjustable-rate mortgage to lower their mortgage payments in the first few years of a loan. Adjustable-rate mortgages provide a fixed, low interest rate for three, five, or seven years, then move to an adjustable rate that varies with the market. Generally, the shorter the amount of time the loan is fixed, the lower the interest rate. Some of these loans need to be refinanced when the fixed time period expires. To determine which loan type is right for you, contact one of our loan counselors at (916) 635-6737. No-PMI Programs (80/15/5 or 80/10/10) Lenders require borrowers who put less than 20 percent down to carry private mortgage insurance that will cover the loan in case the borrower defaults. The cost of mortgage insurance goes directly to the insurance company with no benefit to a reliable borrower. To avoid this cost, creative loan programs allow you to put 5 or 10 percent down and take out a second mortgage to cover the difference between the down payment and the 20 percent required. In other words, for an 80/15/5 loan, you would put down 5 percent and borrow 15 percent from the lender to make the 20 percent down payment needed to avoid the mortgage insurance. In addition to saving money, these programs increase your tax savings. To discuss creative financing options, talk to a loan counselor at (916) 635-6737