Loan Programs

There are a few different types of loans and it can be difficult to know which program will work 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.

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: $510,400
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:

Down Payment: May 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 HUD and may vary by county.
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 25 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.
No cash reserves are required.
Borrowers are not required to be first time homebuyers.
Minimum credit score of 620 from most lenders.

VA

One of the only 100% LTV programs around. No down payment required. VA is now available up to 2 Million loan amount depending on credit scores.
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.
Available only to Veterans with full entitlement. Borrower with partial entitlements are limited to Freddie Mac loan limits on 100% LTV loans.
Loan Amount $1.5m – $2m minimum FICO 700
Loan Amount $1.0m – $1.49m minimum FICO 680
Loan Amount $750k – $999k minimum FICO 620
Loan Amount <$750k – normal guidelines apply (down to 580 FICO)
Loan Amount up to county loan limits ($786k for HI) – Standard VA Guidelines apply (down to 580 FICO)

Reverse Mortgages*

One borrower 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.

*Reverse mortgages are loans offered to homeowners who are 62 or older who have equity in their homes. The loan programs allow borrowers to defer payment on the loans until they pass away, sell the home, or move out. Homeowners, however, remain responsible for the payment of taxes, insurance, maintenance, and other items. Nonpayment of these items can lead to a default under the loan terms and ultimate loss of the home. FHA insured reverse mortgages have an up front and ongoing cost; ask your loan officer for details. These materials are not from, nor approved by HUD, FHA, or any governing agency.