T.D. Bank, Wells Fargo and Bank Of America are offering home loans with down payments as low as 5 percent. T.D. Bank has a “Right Step” mortgage that lets you put down just 5 percent. You’re allowed to get as much as 2 percent of the sale price as a gift from a relative or other 3rd party, so now all you have to do is come up with 3 percent of the 5 percent down. These big breaks are now available because of market opportunity. F.H.A., after taking on risky loans is depleted of its reserves and now has increased costs. F.H.A. has been raising premiums and this year borrowers were required to buy private mortgage insurance for the life of the loan; this has caused many prospective borrowers to look elsewhere. Rising home prices have made loans once deemed too risky, less of a gamble for private lenders; banks now feel they can offer a better deal than F.H.A.; true you still have to buy private mortgage insurance, but that’s only until you only have to do that until you’ve built up 20 percent equity in the home and not for the life of the loan. Homeowners can refinance to end their F.H.A. insurance, but rates are so low that by the time an F.H.A. borrower is able to refinance to a lower rate it may not be worth it.
