Low Down MFR Primary Home Options, Conforming - Superconforming

[Jerry Padilla]

Listed below are the 3 programs that allow for low down payment options on Primary Home MFR or Multi-Family Homes.

Most everyone is aware of the FHA program. The benefit is only 3.5% down and the drawback is the rent must meet the self-sufficiency rules. There are also high fee's for mortgage insurance compared to other programs.

The Freddie Mac Home Possible programs is great and works well in the no income limit pockets of properties so you don't have to meet the income restriction limits. This program also has a reduced mortgage insurance. 

The Portfolio program has no mortgage insurance, but the property is required to have a purchase price of the conforming limit plus $1. 

I am able to lend in all 50 states and have the knowledge and experience to guide you through these programs as well as many other investor friendly programs, so feel free to reach out with any questions or financing needs!

Low Down Portfolio Option SuperConforming Limit

Freddie Mac Home Possible Program

FHA Financing Program

*PRIMARY RESIDENCE ONLY - UNLIMITED AMOUNT OF FINANCED PROPERTIES

*MINIMUM CONFORMING LIMITS + $1 – NO EXCEPTIONS

*Maximum Financing Total Under This Program is $3,000,000 unpaid principal balance

* NO MI

30 yr fixed

5/1 ARM

7/1 ARM

Purchase/Rate & Term Criteria – LTV

• Seller may contribute up to ( 3% if >90% LTV) & (6% if < or = 90%)
• Gift Finds not allowed if >90% LTV
• No Escrow Waiver

Cash Out & Rate & Term Criteria

• 6 month seasoning requirement
• Property must not have been listed for sale for previous 6 months from application date.

*Non Traditional Credit Not Permitted

*Declining Markets noted by appraiser - LTV will be reduced by 5%

* New York and Maine not available, Most States This Program is Available!

* Massachusetts not allowed

Properties Allowed:

Single Family (Detached, Semi Detached, Attached)

1-4 units

PUD (Detached, Attached)

Warrantable Condominium(Detached, Attached)

Non-Warrantable Condominiums Attached/Detached) including Condo-tels.

(Subject to Prime Lending Approval)

** FIRST TIME HOME BUYERS - payment shock ratio is required unless living rent free or currently own home free and clear. Caluclation divides proposed monthly housing payment by current total monthly housing payment. This ratio must not exceed 250%.

1-4 Unit Primary Residential Property or 1 Unit Second Home

• 95% LTV
  • 700 Credit Score Required
  • $3,000,000 max loan amount
  • 9 months Reserve Requirement
  • No Mortgage Insurance
  • Max DTI 45%

$2,000,000 max loan amount

• 90% LTV
  • 700 Credit Score Required
  • $3,000,000 max loan amount
  • 9 months Reserve Requirement
  • No Mortgage Insurance
  • Max DTI 45%

Cash Out Refinance Criteria - Maximum Cash Back - $500,000

1-4 Unit Primary Residential Property or 1 Unit Second Home

• 85% LTV
  • 700 Credit Score Required
  • $1,500,000 max loan amount
  • 9 months Reserve Requirement
  • No Mortgage Insurance
  • Max DTI 45%

Cash Out Debt Consolidation - Maximum $100,000 to be paid off

1-4 Unit Primary Residential Property or 1 Unit Second Home

• 95% LTV
  • 740 Credit Score Required
  • $750,000 max loan amount
  • 9 months Reserve Requirement
  • NO Mortgage Insurance
  • Max DTI 35%
• 90% LTV
  • 700 Credit Score Required
  • $750,000 max loan amount
  • 9 months Reserve Requirement
  • No Mortgage Insurance
  • Max DTI 35%

Texas Re - Financing Only

1 Unit Primary Residential Property Only!

• Rate & Term Refinance:
  • 80% LTV
  • 700 Credit Score Required
  • $3,000,000 max loan amount
  • 9 months Reserve Requirement
  • NO Mortgage Insurance
  • Max DTI 45%
• Cash Out Refinance:
  • 80% LTV
  • 700 Credit Score Required
  • $1,500,000 max loan amount
  • 9 months Reserve Requirement
  • No Mortgage Insurance
  • Max DTI 45%

Freddie Mac Home Possible Program

Home Possible Financing - Income limits apply ONLY in certain locations. Locations considered to be underserved markets are low income census tracts - and have no income restrictions.

Main Points For Freddie Mac's Home Possible -

• Reduced Mortgage Insurance
• Low Down Payments:
  • LTV of 97% on 1 unit & 95% on 2-4 units within standard conforming limits.
  • LTV of 95% 1 unit, 2 unit -85%, 3-4 units 80% for super conforming.
• Conforming loan limit look up:

Conforming Loan Lookup

• PRIMARY Residence purchase only
• NOT Required to be a first time home buyer
• Locations considered a low income census tract - have no income restrictions
• On 2-4 units - can use rental income from other units to assist in qualifying for the property.
• >90% financed - can receive up to 3% seller paid financing concessions

• Purchase transactions only - no cash out & no rate and term refinances allowed
• Income limits apply ONLY in certain locations. The borrowers qualifying income converted to annual income must not exceed 100% of the Area Median Income for the location of the subject property. This can be looked up on Freddie Mac’s website; Freddie Mac Home Possible Eligibility
• MI insurance when greater than 80% LTV
• First time Home Buyer must complete the Homebuyer Education Program
• 2-4 Unit Purchase must complete Landlord Education Program

FHA Standard Loan Amounts

- Maximum loan amount as determined by FHA (Conforming Loan Limits depending on location and number of units - below)

- Each county has its own individual area ceiling limit, and can be found here;

FHA Loan Limits

House Hacking With An FHA Mortgage - FHA Financing;

No Maximum Financed Properties

This is an Owner Occupied Mortgage Product.

Inducements to Purchase

• Contributions up to 6% of the sales price from seller towards closing costs.

Down Payment Requirements

• Minimum down payment into the transaction of at least 3.5%. Gift funds are considered part of borrower’s own funds.
• 60 day history is required to verify the source of the down payment.
• Gifts may be funded by an immediate family member....... But must be verified by 60 day history, and must be a gift with no requirement to pay back.

Reserve Requirements

• 3-4 Unit owner occupied properties must have 3 months PITI
• Reserves must be borrowers own funds and verified by a 60 day history.

Three (3)- and Four (4)-Unit Property - Must meet the Self Sufficiency Rule Below!

The maximum mortgage amount for 3-4 unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100%, regardless of the occupancy status. This is also taking into consideration, a 25% vacancy factor.

Fee's associated with FHA Financing;

Upfront mortgage insurance premium (UFMIP), and

Annual insurance premium which is collected in monthly installments

Upfront Mortgage Insurance Premium - For 15 year and greater than 15 years.

• 1.75% of purchase price

Annual Insurance Premium

• Greater than 15 years & greater than or = 95% LTV - 0.85%
• Greater than 15 years & less than 95% LTV - 0.80%
• Less than or = 15 years & Greater than 90% LTV - 0.7%
• Less than or = 15 years & less than 90% LTV - 0.45%

Annual Insurance Premium For Higher Balance Loan Amounts - Greater than $625k

• Greater than 15 years & greater than 95% LTV - 0.105%
• Greater than 15 years & less than or = to 95% LTV - 0.1%
• Less than or = to 15 years & greater than 90% LTV - 0.95%
• Less than or = 15 years & less than or = to 90% LTV - 0.7%
• Less than or = 15 years & less than or = to 78% LTV - 0.45%

INCOME—RENTAL

• Any net rental income from the subject property must be added to the borrower’s qualifying gross monthly income by applying 75% of the lesser of;
• Fair Market Rent reported by the appraiser; or The rent reflected on the existing or proposed lease agreement.

History of Rental Income.

When a borrower has a history of receiving rental income from the subject property since the previous tax year, the borrower must provide most recent Federal Tax Returns, including IRS Schedule E, covering the previous two (2) years

FHA Rate and Term Refinance -

Maximum LTV is 97.75%

FHA Cash Out Refinance -

Maximum LTV is 85% of appraised value if property has been owned 12 months or greater, and if less than 12 months from purchase than the lesser of purchase price or appraised value is used.