I have been reading online but can’t seem to find an answer to my question.
Here is my situation:
I was going to buy a house for around $320k. I have about $30k saved up, and was going to borrow $35k from my brother so that I could get conventional financing. The reason I am doing this was for one main reason, and that is that I heard that you can offer less on a house if you are coming in with 20% down as opposed to someone who is offering and is using FHA (for example) and not putting as much down.
Is this true?
I know that I will be saving money as far as no PMI, but I will be paying interest on the money I loan from my brother (he would take out a line of credit for around 4 - 5% interest), so I won’t be saving THAT much (I don’t think anyways) by getting a loan from him, I just thought I could offer less for a house than someone coming in with a lesser down payment.
Honestly, I would pay an extra $100 - $150/month to not have to borrow from my brother. I have no worries about paying it back, and he said he wouldn’t be worried about it either; borrowing from family or friends has never been my favorite thing to do as it can make the relationship complicated (especially if something were to happen).
However, if an offer for someone with 20% is the same as someone with 3.5% down than I would prefer to put a lot less down on the place. Is there a benefit when it comes to the % down you put on a house other than the PMI they take off at 20% (and the somewhat lower interest rate you get with conventional)?
Any (educated) opinions greatly appreciated!