General Guideline Notes & Typical Gotchas
these guidelines were believed to be accurate on 03/04/2024
* * * These are AGENCY guidelines – – – – – – – beware that investors may have overlays * * *
THIS DOCUMENT DOES NOT REPLACE READING THE FULL AGENCY GUIDELINE
It is meant to alert you to situations to be careful of and research further on your own.
Maximum Purchase Price and Loan Amount at various LTVs
conventionalconventionalconventionalconventional
Purchase Price$1,277,583$1,022,067$958,188$901,824
Down Payment %40%25%20%15%
Down Payment $$511,033$255,517$191,638$135,274
Loan To Value Ratio60%75%80%85%
Maximum Loan Amount$766,550$766,550$766,550$766,550
conventionalconventionalconventionalFHA – Orange County
Purchase Price$851,722$806,895$790,258$624,456
Down Payment %10%5%3%3.5%
Down Payment $$85,172$40,345$23,708$21,856
Loan To Value Ratio90%95%97%97%
Maximum Loan Amount$766,550$766,550$766,550$602,600
Gift Funds for PurchaseMinimum contribution from borrower’s own accounts (Purchase)
AgencyProperty/Mortgageup to 80% CLTV80.01% to 95% CLTV95.01%+ CLTV
Freddie1-unit primary / 2ndAll Can Be GiftAll Can Be GiftAll Can Be Gift
Freddie2- to 4-unit propertiesAll Can Be Gift3% from borrower3% from borrower
FreddieManufactured HomesAll Can Be GiftAll Can Be GiftAll Can Be Gift
AgencyProperty/Mortgageup to 80% CLTV80.01% to 95% CLTV95.01%+ CLTV
Fannie1-4 unit primary / 2ndAll Can Be Gift5% from borrowersee
Fannie1-unit primaryAll Can Be Gift5% from borrowerHomeReady
Fannie2-4 unit primaryAll Can Be Gift5% from borrowerGuidelines
Fannie & FreddieInvestmentGift funds are NEVER allowed
ReservesReserves are determined by AUS > Always review findings to be clear
Fannie1-unit primaryReserves are NOT required
Second Home2 months are required
2-4 unit primary6 months are required
Investment Property6 months are required
Cash-out+DTI>45%6 months are required
Cash-out REFIthe balance of 30-day accounts, less the cash back
Additional reserves may need to be verified based on DU’s overall risk assessment.
For Primary or Second Home Loan, additioinal reserves needed if the borrower already has multiple financed properties
Freddie1-6 financed properties2 mos. of PITIA on all non-primary financed properties
7-10 financed properties6 mos. of PITIA on all non-primary financed properties
We must verify all reserves required by Loan Product Advisor, as stated on the Feedback Certificate.
Non Occupying Co Borrower
Both Fannie and Freddie allow, and the NOCB does NOT have to be a family member
Self Employment,  Part Time Employment, Commission, Bonus, Dividends, Interest, Royalties
Need documented 2 year history to determine qualifying income from these sources.
Document with 2 years tax returns, 2 years end of year paystub, recent paystub, asset accounts, etc.
Employment Gap
FannieMust support stable income with at least 6 months on current job
FreddieRequires 2 year work history.
Employment Related Assets401(k) or IRA, SEP, Keogh, or Lump Sum Distribution / Severance (non self employed)
Fannie80 max LTV if 62, max LTV 70 if <62, Purchase & R-T, 1-2 unit Primary & 2nd home
Requires 640 minimum FICO, divide by loan term for monthly income.
Assets as a basis for repayment of obligations – retirement, securities, lump sum distribution, business sale proceeds
Freddie80 LTV at any age, Purchase & R-T, 1-2 unit Primary & 2nd
Requires access without penalty, divide total of asset value by 240 for monthly income
Maximum Number of Financed Properties
Fannie & Freddie both allow a maximum of 10 financed properties with AUS approval
BUT your processor & underwriter will hate you.       And you will hate yourself
Convert departing primary to rental – – -and using the rental income to qualify
FREDDIE ONLY – use 75% of the lease which must start by the 1st mtg pmt, to offsetnot allowed
mortgage payment must collect 1 payment upfront. Prop. Mgmt Exp. Not required.by Fannie
Note that some investors may have overlays – check with Malia before locking.
Max DTI from AUSEXAMPLE120K Year
ConventionalIf Income is:10K Month
Fannie – DU – maximum AUS approvable DTI50.000%Maximum Liabilities$5,000
Freddie – LP – maximum AUS approvable DTI50.499%Maximum Liabilities$5,499
Interested Party Contributions
Fannie & Freddie75%to 90%> 90%
Primary & Second Home9%6%3%
Investment2%2%2%
FHAAll LTVs
Primary ONLY for FHA6%6%6%
VAAll LTVs
Primary ONLY for VA4%4%4%
Support IncomeChild Support and Marital Support
Must continue for 3 years minimum = 36 more payments
Must show 6 months on time receipt
Must be specified in divorce decree or separation agreement
Excluding Personal Debt Paid By BusinessExample:  Business pays loan on vehicle
Must show paid on time by business bank account for a minimum of 12 consecutive months
If less than 12 payments have been made, you can NOT exclude.
Both Fannie and Freddie require documenting this with the most recent 12 months of cancelled checks.
Excluding Personal Debt Paid By OthersExample:  Parent pays student loan, car payment, CC.
Fannie – the other party has made 12 on time payments and is not an interested party to the transaction
Freddie – the other party has made 12 on time payments and is not an interested party to the transaction
Both Fannie and Freddie require documenting this with the most recent 12 months of cancelled checks.
The paying party does NOT have to be obligated on the debt
Excluding Mortgage Debt Paid By Other
Fannie – no delinquencies in 12 months, party making payments obligated, and not using rental income.
Freddie – no delinquencies in 12 months, party making payments obligated, and is not an interested party.
Both Fannie and Freddie require documenting this with the most recent 12 months of cancelled checks.
Fannie & FreddieFannie & Freddie
Mortgage InsuranceStandardHomeReady – HomePossible
Base LTV> 20 Years≤ 20 Years> 20 Years≤ 20 Years
95.01 to 9735%35%25%25%
90.01 to 9530%25%25%25%
85.01 to 9025%12%25%12%
85 & under12%6%12%6%
Mortgage Insurance ProvidersLocal RepOur Preferred Providers
EnactWilliam Jackson919-306-5348William.Jackson@enactmi.com
ArchKip Byrne704-907-7359kbyrne@archmi.com
MGICLisa Dahlgren704-617-2571lisa_dahlgren@mgic.com
EssentAmber Hoots336-972-8179amber.hoots@essent.us
Financed Mortgage InsuranceFINANCEDSPLIT PREMIUM
SunTrustAllowsNO
PennyMacAllowsAllows
US BankAllowsNO (we think)
Franklin AmericanAllowsAllows
ChaseNOAllows
Financed Mortgage Insurance and Split Premium Mortgage Insurance is available with some Investors for one unit primary and second homes on purchase and limited cash out refinances.

The LTV to calculate the amount of MI coverage needed is based on the LTV without the financed MI.
The LTV including the financed MI must be used to determine product eligibility.

First Time Home Buyer & Affordable ProgramsMCCH-ReadyH-Possible
Maximum LTVNone97% for FTHB only
NOCBNot AllowedNOCB allowed at max 95% LTV
FTHB Purchase Education RequirementNoneYes
First Time Home BuyerRequiredNot Applicable
Purchase Price Limitfor 2024480000Conventional Loan Limit
Income LimitBy County80% of AMI
Household Income Must Be Disclosed forAnyone on deedNot Applicable
Borrower Income That Must Be DisclosedNot ApplicableOnly need to disclose enough to qualify
Citizenship
Borrower must be US Citizen, or have GREEN CARD, or have valid, unexpired VISA that allows work.
Dreamers are allowed – need SS#, EAD, proof of income, bank statements
YES – we want to include Investor Overlays….can you provide them and I will update this section?
EAD instead of Visa
FannieIf EAD expires within 90 days of closing, must document renewall applied for
YES – we want to include Investor Overlays….can you provide them and I will update this section?
These fees impact APRIF Closing is on:Send CDin order to
Discount Points Paidis on:the previous:Close on:
Single Premium Mortgage InsuranceMondayThursdayMonday
Monthly Mortgage Insurance PaymentsTuesdayFridayTuesday
VA Funding FeeWednesdayFriday or SaturdayWednesday
FHA UFMIPThursdayMondayThursday
Commitment FeeFridayTuesdayFriday
Flood CertificationSaturdayWednesdaySaturday
Closing Attorney Fee
eRecording Fee
Prepaid Daily Interest
Escrow Waiver Fee
VA Funding Fee
Funding FeeFunding Fee
Down PaymentFirst UseSubsequent Use
Less than 5%2.15%3.30%
5% or more1.50%1.50%
10% or more1.25%1.25%
REFINANCE SPECIFIC RULES
Rate & Term Refi – Max Cash BackConventional Loan Limit is $766,550 (2024)
Fannie          – the maximum cash back to the borrower is the LESSER of $2000 or 2% of the loan amount
$2000 is 2% of $100,000, so for any loan amount over $100,000, the maximum cash back is $2000
> > > so $2000 is the MAXIMUM cash back with a Fannie Rate & Term Refinance
Freddie          – the maximum cash back to the borrower is the LARGER of $2000 or 1% of the loan amount
$7665.50 is 1% of the conventional loan limit, so will be the maximum cash back for Freddie
> > > so $2000 is the MINIMUM cash back with a Freddie Rate & Term Refinance
12 Month Cash-Out Rule
Freddie – if paying off a mortgage and taking cash out, requires 1 year seasoning.
Fannie – if paying off a mortgage and taking cash out, requires 1 year seasoning.
Appraisal Recertificatiion
Fannie & Freddie both allow appraisals to be recertified if they meet the following criteria:
Must be completed no more than 4 months before the note date
Original Age of Appraisal can be no more than 12 months old at the note date.
Spousal Buyout / Refinance to buy out another owner’s interest
Fannie & Freddie Allow – Borrower cannot get 1 penny, all proceeds to ex-spouse, amount per divorce decree, must have jointly owned 12 months & occupied as primary residence
Student Loan Refinance
Fannie – a borrower must be obligated, must be paid off in full, run AUS as cash-out but price as rate-term.
Freddie – ???
Refinance Property listed for sale
Fannie – Listing must end by Note Date
Freddie – Listing must end by Note Date