My wife and I are considering buying our first house. We are pre-approved for a mortgage and, after months of seeing nothing but fixer-uppers or homes in questionable areas, we found a home we really like. The house is technically within our pre-approval range, but it's nonetheless a bit pricier than we planned on. The monthly payments are okay, but making the 10% down payment and paying closing costs will leave us with virtually no savings.
I've always heard that 10% is the minimum down payment, and most lenders seem to start from that assumption, unless you're willing to pay the high monthly premiums of an FHA loan. However, I keep reading articles that mention a 95% loan-to-value ratio (i.e. a 5% down payment) as a potential mortgage scenario. This is surprising to me, as I thought the minimum was 10%.
Is it possible, then, to get a conventional mortgage with something like 8% down? The extra two percent of the purchase price would go a really long way to helping us feel more comfortable about having money set aside in case of emergencies or unexpected home costs. I'm sure there's a cost of some kind - maybe a higher rate?