In traditional home loan financing, a buyer would need to pay a 20% down payment in order to avoid paying PMI.
If you are unfamiliar with PMI, it is an acronym for “private mortgage insurance”. Investopedia defines private mortgage insurance as: a risk-management product that protects lenders against loss if a borrower defaults. PMI can add enough to your monthly payment to make a home out of reach financially.
Enter SoFi. I learned about the lender SoFi from a sponsored post they placed on Curbed Los Angeles. The thing that caught my eye was the bit about a no PMI loan with a down payment as low as 10%. That’s a pretty big deal. PMI fees vary from bank to bank and depending on the size of the down payment and your credit score, from around 0.3 % to about 1.5 % of the original loan amount per year, according to Bankrate.com.
So, say you buy a $500,000 house, put 10% down – or $50,000 – you’d pay between $1,350 to $6,750. That’s some serious cash! That extra $112.50 to $562.50 may make your $500,000 dream home unattainable. Even if you could afford it, why would you want to pay it?
Qualifying for a SoFi loan
Unfortunately, not everyone can be a SoFi customer. SoFi’s customers have good credit, a strong academic background, and strong employment history. These loans aren’t for someone that has credit issues or low paying jobs. Their customer profile may be something like the following:
- The millennial buyer who makes great income but doesn’t have the necessary 20% or 30% down payment to qualify for a loan.
- The customer who has an established financial profile and wants to direct his assets in a more efficient manner and will use the 10% down payment option.
- The customer whose home was affected by the economy in terms of property valuation but now has an equitable position to use the proceeds from the sale of his current property to qualify for the purchase of a new home using our 10% down payment option.
If you have good credit and high paying job, but are hindered by high student loans, you should contact SoFi to see if you qualify for their loans. Their flexible debt-to-income limits may allow you to get more financing than traditional lenders.
No origination fees
Another advantage to working with SoFi is that they have no origination or lender fees. This will reduce your closing costs and allow more of your money to go towards your down payment.
Which states offer this no PMI loan program?
SoFi is licensed to originate mortgages in Alabama, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, Minnesota, New Hampshire, New Jersey, North Carolina, North Dakota, Pennsylvania, Rhode Island, Texas, Vermont, Virginia, Washington, Washington, D.C., Wisconsin, and Wyoming.
If you live in southern California, contact Jim Benavidez (NMLS #491666) at Jbenavidez@SoFi.org and tell him you heard about SoFi on Realest Blog.
If you live elsewhere go to www.SoFi.com/mortgage.