FHA  is still the number one purchase and refinance for Minnesota mortgage loans and the guidelines have changed under the Obama Administration to help homeowners to obtain Minnesota mortgage for purchasing their home with still,  a small down payment. There have been a few changes that have taken place, more money is now required from the borrower on purchases and a raise in credit score requirements has been implemented. Traditionally, the down payment money was at 3%, but that has been increased up to 3.5% and that has to be the borrowers/co-borrowers own money, the rest can be a gift to cover closing costs . The maximum loan to value for FHA Minnesota mortgages has been reduced  from 97% to 96.5%, not a major reduction, but still a reduction.  However, what offsets the reduction is the increase in loan amounts per city/per county. Loan limits have been raised to the conforming limits and above. This gives greater coverage for more home purchases that were out of reach previously, due to low loan amounts that were set for each area.

Unless your putting down 20% or more for your down payment on a purchase, this type of mortgage is far less expensive than a conventional mortgage for a purchase and even a refinance if above an 80% loan to value. Conventional mortgages still offer the lowest rate between the two. Mortgage insurance (PMI) is expensive and mandatory on every Minnesota conventional mortgage loan above 80% loan to value.

This is why the 80/20 mortgage was so popular years ago when 100% financing was still available, because it allowed you to get around paying mortgage insurance. Today second mortgages and HELOC'S  (Home equity lines of credit) are getting scarcer and carrying much higher credit score requirements., so the first and second mortgage option together is getting tougher to get through underwriting.  Remember, when shopping online for an  Minnesota Mortgage quote, never put your  social security number on an online form, only give it to a company that you feel comfortable with.