| 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 | |||||||||
| conventional | conventional | conventional | conventional | ||||||
| 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 Ratio | 60% | 75% | 80% | 85% | |||||
| Maximum Loan Amount | $766,550 | $766,550 | $766,550 | $766,550 | |||||
| conventional | conventional | conventional | FHA – 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 Ratio | 90% | 95% | 97% | 97% | |||||
| Maximum Loan Amount | $766,550 | $766,550 | $766,550 | $602,600 | |||||
| Gift Funds for Purchase | Minimum contribution from borrower’s own accounts (Purchase) | ||||||||
| Agency | Property/Mortgage | up to 80% CLTV | 80.01% to 95% CLTV | 95.01%+ CLTV | |||||
| Freddie | 1-unit primary / 2nd | All Can Be Gift | All Can Be Gift | All Can Be Gift | |||||
| Freddie | 2- to 4-unit properties | All Can Be Gift | 3% from borrower | 3% from borrower | |||||
| Freddie | Manufactured Homes | All Can Be Gift | All Can Be Gift | All Can Be Gift | |||||
| Agency | Property/Mortgage | up to 80% CLTV | 80.01% to 95% CLTV | 95.01%+ CLTV | |||||
| Fannie | 1-4 unit primary / 2nd | All Can Be Gift | 5% from borrower | see | |||||
| Fannie | 1-unit primary | All Can Be Gift | 5% from borrower | HomeReady | |||||
| Fannie | 2-4 unit primary | All Can Be Gift | 5% from borrower | Guidelines | |||||
| Fannie & Freddie | Investment | Gift funds are NEVER allowed | |||||||
| Reserves | Reserves are determined by AUS > Always review findings to be clear | ||||||||
| Fannie | 1-unit primary | Reserves are NOT required | |||||||
| Second Home | 2 months are required | ||||||||
| 2-4 unit primary | 6 months are required | ||||||||
| Investment Property | 6 months are required | ||||||||
| Cash-out+DTI>45% | 6 months are required | ||||||||
| Cash-out REFI | the 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 | |||||||||
| Freddie | 1-6 financed properties | 2 mos. of PITIA on all non-primary financed properties | |||||||
| 7-10 financed properties | 6 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 | |||||||||
| Fannie | Must support stable income with at least 6 months on current job | ||||||||
| Freddie | Requires 2 year work history. | ||||||||
| Employment Related Assets | 401(k) or IRA, SEP, Keogh, or Lump Sum Distribution / Severance (non self employed) | ||||||||
| Fannie | 80 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 | |||||||||
| Freddie | 80 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 offset | not 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 AUS | EXAMPLE | 120K Year | |||||||
| Conventional | If Income is: | 10K Month | |||||||
| Fannie – DU – maximum AUS approvable DTI | 50.000% | Maximum Liabilities | $5,000 | ||||||
| Freddie – LP – maximum AUS approvable DTI | 50.499% | Maximum Liabilities | $5,499 | ||||||
| Interested Party Contributions | |||||||||
| Fannie & Freddie | 75% | to 90% | > 90% | ||||||
| Primary & Second Home | 9% | 6% | 3% | ||||||
| Investment | 2% | 2% | 2% | ||||||
| FHA | All LTVs | ||||||||
| Primary ONLY for FHA | 6% | 6% | 6% | ||||||
| VA | All LTVs | ||||||||
| Primary ONLY for VA | 4% | 4% | 4% | ||||||
| Support Income | Child 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 Business | Example: 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 Others | Example: 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 & Freddie | Fannie & Freddie | ||||||||
| Mortgage Insurance | Standard | HomeReady – HomePossible | |||||||
| Base LTV | > 20 Years | ≤ 20 Years | > 20 Years | ≤ 20 Years | |||||
| 95.01 to 97 | 35% | 35% | 25% | 25% | |||||
| 90.01 to 95 | 30% | 25% | 25% | 25% | |||||
| 85.01 to 90 | 25% | 12% | 25% | 12% | |||||
| 85 & under | 12% | 6% | 12% | 6% | |||||
| Mortgage Insurance Providers | Local Rep | Our Preferred Providers | |||||||
| Enact | William Jackson | 919-306-5348 | William.Jackson@enactmi.com | ||||||
| Arch | Kip Byrne | 704-907-7359 | kbyrne@archmi.com | ||||||
| MGIC | Lisa Dahlgren | 704-617-2571 | lisa_dahlgren@mgic.com | ||||||
| Essent | Amber Hoots | 336-972-8179 | amber.hoots@essent.us | ||||||
| Financed Mortgage Insurance | FINANCED | SPLIT PREMIUM | |||||||
| SunTrust | Allows | NO | |||||||
| PennyMac | Allows | Allows | |||||||
| US Bank | Allows | NO (we think) | |||||||
| Franklin American | Allows | Allows | |||||||
| Chase | NO | Allows | |||||||
| 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. | |||||||||
| First Time Home Buyer & Affordable Programs | MCC | H-Ready | H-Possible | ||||||
| Maximum LTV | None | 97% for FTHB only | |||||||
| NOCB | Not Allowed | NOCB allowed at max 95% LTV | |||||||
| FTHB Purchase Education Requirement | None | Yes | |||||||
| First Time Home Buyer | Required | Not Applicable | |||||||
| Purchase Price Limit | for 2024 | 480000 | Conventional Loan Limit | ||||||
| Income Limit | By County | 80% of AMI | |||||||
| Household Income Must Be Disclosed for | Anyone on deed | Not Applicable | |||||||
| Borrower Income That Must Be Disclosed | Not Applicable | Only 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 | |||||||||
| Fannie | If 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 APR | IF Closing is on: | Send CD | in order to | ||||||
| Discount Points Paid | is on: | the previous: | Close on: | ||||||
| Single Premium Mortgage Insurance | Monday | Thursday | Monday | ||||||
| Monthly Mortgage Insurance Payments | Tuesday | Friday | Tuesday | ||||||
| VA Funding Fee | Wednesday | Friday or Saturday | Wednesday | ||||||
| FHA UFMIP | Thursday | Monday | Thursday | ||||||
| Commitment Fee | Friday | Tuesday | Friday | ||||||
| Flood Certification | Saturday | Wednesday | Saturday | ||||||
| Closing Attorney Fee | |||||||||
| eRecording Fee | |||||||||
| Prepaid Daily Interest | |||||||||
| Escrow Waiver Fee | |||||||||
| VA Funding Fee | |||||||||
| Funding Fee | Funding Fee | ||||||||
| Down Payment | First Use | Subsequent Use | |||||||
| Less than 5% | 2.15% | 3.30% | |||||||
| 5% or more | 1.50% | 1.50% | |||||||
| 10% or more | 1.25% | 1.25% | |||||||
| REFINANCE SPECIFIC RULES | |||||||||
| Rate & Term Refi – Max Cash Back | Conventional 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 | |||||||||