Loan Programs

There are a few different types of loans and it can be difficult to know which one is best for you and your current situation. That’s why we’re here. We can go over each of these together, but here are the basics:

BREAKING DOWN ‘Conforming Loan’

The term “conforming” is most often used when speaking specifically about a mortgage amount; however, the terms “conforming” and “conventional” are frequently used interchangeably. Mortgages that exceed the conforming loan limit are classified as non-conforming or jumbo mortgages.

  • Minimum Down Payment: 3.0% down 97% LTV this program has Income Limits
  • 95% or lower LTV has No Income limits.
  • Down Payment can come from gift
  • Seller can cover closing costs up to 3% of purchase price
  • Monthly MI: TBD Varies by LTV and Credit Scores
  • Maximum Loan Amount SFR: $424,100
  • Minimum FICO 620, The higher the score the better the rates.
  • Rate and Term and Cash Out Refinancing is allowed
  • Both Fixed-Rate and Adjustable-Rate loans permitted
  • Roof & Pest inspections not mandatory unless noted by appraiser or called for in contract
  • Do not have to be a first-time buyer
  • Loan to Value ( LTV) Minimum Owner Occupied  97% LTV, Second Home 90% LTV, Investment properties 80% LTV
  • No requirement for reserves when purchasing a single family dwelling
  • Non-Occupying co-borrowers allowed on Owner Occupied Homes


FHA

An FHA loan is a mortgage insured by the Federal Housing Administration. They are a popular option for a few reasons:

  • Minimum down payment: 3.50% (This can come as a “gift” from approved sources. There are also periodic grant programs that can help borrowers to pay for their down payment.)
  • Minimum FHA FICO requirement without additional down payment requirements is 580, but most companies require at least 620.
  • No income limits.
  • Do not have to be a first-time buyer.

Other factors to take into account when considering an FHA loan:

  • Up Front Mortgage Insurance (MI) of: 1.75%, can be added to Loan
  • Monthly MI of: .85%
  • Maximum Loan Amount for Single Family Residences: Loan amounts are set by counties. In many Oregon counties, the limit is ~$270,000, though other counties closer to the larger metro area of Portland cap at ~$370,000.
  • Maximum Seller Concession: 6%
  • Refinancing is allowed, at high loan to value ratios
  • Both Fixed-Rate and Adjustable-Rate loans permitted
  • Roof & Pest inspections not mandatory unless noted by appraiser or called for in contract
  • Must be owner occupied
  • No requirement for reserves when purchasing a single family dwelling.
  • Non-Occupying co-borrowers allowed
  • Can utilize other state, county and city programs, and Energy Efficient Mortgage options
  • FHA requires 90 days from date of trustee sale before purchase contract can be written unless REO is a federally chartered bank
  • FHA Loans are assumable


FHA 203(k) (Full or Streamlined)

The 203(k) Rehabilitation Loan provides funds for both the purchase of the property and the costs of its rehabilitation. Here are a few other facts about the FHA 203(k) loan:

  • 1 to 4 Units / refinance and purchase transactions.
  • Threshold for rehabilitation work is at least $5000.
  • Streamline 203(k) available for smaller non-structural work. Full 203(k) is required if there are any structural fixes needed.
  • FHA 203(k) loans must be used
  • Rehab work funds are escrowed and dispersed upon completion and inspection.
  • When the home is appraised, there will be an as-is current appraisal, and a projected appraisal value which takes into consideration the work completed. The home must appraise, as-is, at or above the amount being borrowed to purchase the house from the current owner(s). The house with completed rehabilitation must appraise at or above the total amount being borrowed in the loan.
  • When the work is completed, the appraised value may come in higher than the amount borrowed. At that time, you have the option to refinance with the added equity in the home and perhaps remove the MI.


USDA Loans

Depending on where you live, the U.S. Department of Agriculture loan may be available to you. What’s great about these loans, if you qualify, is that they offer 100% financing with no down payment. These loans are meant to assist those living in (or looking to live in) rural areas. Here are a few other requirements of USDA loans, which will affect whether or not the transaction qualifies for the loan:

  • Property must be 8 acres or less.
  • Property can’t have a pool.
  • Properties must be located in eligible rural areas (generally towns with a population of 20,000 or less that are removed from an urban area).
  • Income limits are 115% of the U.S. Median Income (for most counties, the 4-person household income limit is $65,000 maximum).
  • No cash reserves are required.
  • Borrowers are not required to be first time homebuyers.
  • No Loan limit restrictions.
  • Minimum credit score of 620 from most lenders.


VA

  • One of the only 100% LTV programs around. No down payment required.
  • Loan amounts above $417,000 require a down payment.
  • Must have DD214 with honorable discharge.
  • The home must be owner occupied.
  • Bankruptcy and foreclosures do not necessarily eliminate a veteran from qualifying, but your lender may want to see a few years between then and now.
  • No cash reserves required.


Reverse Mortgages

  • Must be 62 years of age, or older.
  • Must be owner occupied.
  • Must be able to demonstrate your ability to pay your property taxes and insurance.
  • Available for most property types – Single Family, FHA approved condominiums, PUD’s and manufactured homes that meet FHA and lender guidelines.
  • Can be used as a tool for guaranteed income, periodic payment of obligations, or in purchasing a home with no mortgage payment.

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