Take this example. Let’s start with a buyer who wants to make a 5% down payment on a $400,000 loan. This particular buyer has a 660 credit score. To set the “test” situation, we will use the rate cost closest to zero (or “par”) for each mortgage program, so that the buyer isn’t paying to obtain the loan.*
Conventional:
Loan Amount: $380,000
Rate: 4.625% (APR: 5.308%)
Mortgage Insurance: 1.150% monthly
1st Monthly Payment: 2,304.28
FHA:
Loan Amount: $380,000
Rate: 3.750% (APR: 5.700)
Mortgage Insurance: 1.75% upfront, 1.30% monthly
1st Payment: 2,198.86
MyCommunityMortgage:
Loan Amount: $380,000
Rate: 4.375% (APR: 4.825%)
Mortgage Insurance: 0.74% monthly
1st Payment: 2,129.86
As you see, the MCM program reduces mortgage insurance requirements and the cost of the mortgage rate, and as a result, the buyer owes less per month! The MCM program looks particularly good next to the Conventional program, because it offers lower mortgage insurance, a lower rate, and a $128.79 lower mortgage payment.