     Patricia Holly (Househunting) | Friday, December 01, 2000 - 11:17 am 
I see a lot here about 3% down FHA loans. My husband and I are in a very strange situation right now. We rent and have never owned a home. Due to the bizarre twists in the economy recently we now take home over 200,000 a year. We would like to buy about a 400,000 home. We both are under the impression we would need 20% down plus misc. costs such as closing, inspections, etc. Because we came to this income level very rapidly we don't have that kind of money in savings. We have it in our 401(k)'s but don't want to touch our retirement funds even for a house. Would we qualify for one of the FHA loans with 3% down with our high income and price range for a house? |
| Ann (Momof3) | Friday, December 01, 2000 - 12:10 pm
Hi, I know a little on the subject. FHA has limits to mortgages and I THINK 400K may be a bit much for that. But there are several mortgages programs that do not require 20%, most people that put 20% are trying to avoid the PMI charges. I know several people that got conventitonal loans with 5% or 7% down. Assuming your credit is good and your debts are low, you should have NO problem getting a mortgage with much less than 20% down |
| Don Semler (Dsemler) | Friday, December 01, 2000 - 02:58 pm
FHA does have limits on the amount they will loan. It is done by county. You can serach at https://entp.hud.gov/idapp/html/hicostlook.cfm
but i guarentee you will be over the limit.
You are also NOT eligiable for a conforming loan if your loan amount is over $275,000(it was just raised). Thus you fall into the Jumbo catagory unless you opt for a split loan in which you do a first w/in conforming limits and a 2nd for the rest. You will not get the "newspaper rate". Jumbo's are generally 3/8 to 1/2% higher. However, you do not have to put 20% down. You can put as little as 5% down but you will have to pay MI.
The biggest issue may be your income. If it recently jumped up, i would have a coupel of questions.
1) why - are you self employed?
2) Is it going to continue at this level..
A large increase in income could create a problem if you have no history of earning this amount in the past of if it is not lickly to continue.
A good example of an acceptable case woudl be a doctor just getting his degree and going to work for a hospital |
| Patricia Holly (Househunting) | Friday, December 01, 2000 - 04:24 pm
Bingo on the doctor thing. I recently graduated school and that is the reason for the huge jump in salary. We probably have no where to go but up unless one of us stops working but that would not be for awhile and only if one of us makes up the others income to keep us close to where we are now.
It is a real problem I think. I hate to continue to rent until we save enough b/c of all the tax benefits we are missing out on. Tell me more about this Jumbo loan thing. |
| Patricia Holly (Househunting) | Friday, December 01, 2000 - 04:26 pm
Thanks for the info Ann. What are the drawbacks to 5% or 7% down with a conventional loan? |
| Ann (Momof3) | Friday, December 01, 2000 - 04:35 pm
You are Welcome, from what I understand conventional loans are harder to get than other programs. they really look at your credit more carefully and your scores I believe have a good part in it, where FHA and other programs focused more on your recent payment history. |
| Don Semler (Dsemler) | Sunday, December 03, 2000 - 10:51 am
Off the top of my head your $400k purchase could be done at 90% but there is also a way to do it at 95% buy doing a 1st and 2nd. You can't do a conventional loan unless you split the loans. Drawback on doing a first and 2nd would be if the blended rate between the two was hgiher than the first with the PMI. 1st and 2nd may be more costly from a rate perspective but require less money down(only 5%).
I'd have to look, but somewhere I did see a Jumbo 95% first. Since these loans are not sold to FHLMC of FNMA you have to find the Investor like RFC that buys them and there guidelines are all a little different since these get sold in the secondary market differently than conforming loans.
GENERAL UNDERWRITING GUIDELINES:
All loans will be underwritten to current Investor guidelines.
1. Must submit original and two copy packages.
2. Full RMCR required with credit scores. All borrowers must have a 620 minimum credit score.
3. An original signed IRS Form 4506 is required for all borrowers at time of underwriting and a second original at closing. In addition, at closing the borrower(s) must sign an additional Form 4506 for each business owned.
4. A verbal verification of employment is required for all borrowers.
5. A minimum down payment of 5% is required from borrower’s own funds for both primary residence and second/vacation properties. The balance may be paid from cash, other equity, gift or subordinate financing. A
down payment of 100% gift funds is allowed for LTVs of 80% or less; borrower’ must pay their own closing costs and subordinate financing is not allowed.
6. Gifts: gifts are allowed from immediate family members only - defined as parents, grandparents, children or
grandchildren. Verification is required for the donor’s ability to provide the funds or the borrower’s receipt of the
funds.
7. Two(2) months PITI in liquid reserves is required, exclusive of cash received at closing.
8. Use of business funds for cash to close or for reserves may be allowed on a case-by-case basis with a letter from
an independent accountant stating affect on the business of withdrawal or potential withdrawal of funds.
9. Debt consolidation loans are not allowed. Borrowers cannot pay-off debt to qualify.
10. Loans made to Non-Permanent Resident Aliens are not allowed.
11. Loans with non-occupant co-borrowers:• Non-occupant co-borrower must be an immediate family member of the borrower.
• The occupant borrower's housing ratio cannot exceed 35%.
• Purchase transactions: the occupant borrower must have a minimum of 10% cash equity.
• Refinance transactions: the non-occupant co-borrower must have been an original purchaser of the property.
• Maximum loan-to-value of 90%
17. Commission/bonus income must be verified for two years. A two year average will be calculated and a year-to-
year comparison must show stable or increasing income. Non-reimbursable business expenses will be deducted
from income. Two years’ signed Federal tax returns are required.
Jumbo Fixed (30JF/15JF)
You will have to have PMI if your mortgage(first) is over 80%. You can avoid PMI as mentioned above by doing a first and 2nd. If you choose just a first you will be reguired to have the following coverage.
PMI
LTV: Up to 30 Year LN 15yr loan
90.01% - 95% 30% 25%
85.01% - 90% 25% 12%
80.01% - 85% 12% 6% |
| Ann (Momof3) | Sunday, December 03, 2000 - 12:26 pm
Wow, I guess that explains everything in great detail for you Patricia. Don is very helpful and I appreciate your posting about my situation as well. Don if you get a chance could you email me?? Thanks |
| Christine Baker (Admin) | Sunday, December 03, 2000 - 05:33 pm
Don, much appreciate your posting the UW guidelines! |
