All Forum Posts by: Jerry Padilla

PROPERTY DOESN'T QUALIFY FOR A TRADITIONAL FHA LOAN?

WORKING WITH A LENDER THAT OFFERS BOTH FHA AND FHA 203K LOANS WILL MAKE THE TRANSITION MUCH MORE SIMPLE IF THEY OFFER BOTH PRODUCTS, RATHER THAN FINDING A NEW LENDER AND STARTING THE PROCESS OVER!

BELOW IS SOME INFO ON BOTH THE FHA 203K AS WELL AS THE TRADITIONAL FHA FINANCING.

FHA FINANCING (SCROLL DOWN FURTHER FOR THE 203K INFO)

For 2018....

FHA Basic standard mortgage limits are:
Single - $294,515

Duplex - $377,750

Triplex - $455,800

Fourplex - $566,425

Conforming FHA Basic High Cost area limits are:

Single - $679,650

Duplex - $870,225

Triplex - $1,051,875

Fourplex - $1,307,175

Maximum Conforming limits are below (If Your Area Qualifies, For Specialty Financing);

Alaska & Hawaii

1 unit - $1,019,475

2 unit - $1,305,375

3 unit - $1,577,800

4 unit - $1,960,750

House Hacking With An FHA Mortgage - FHA Financing;

Maximum Financed Properties - To qualify (Including investments) - 4 including subject!

This is an Owner Occupied Mortgage Product.

Inducements to Purchase

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

Credit Requirements & Derogatory Remarks

• Required is 600.
• Minimum of 2 trade lines are required
• No more than $1,000 in disputed collections
• Must be all on time payments in the past 12 months of mortgage history
• No more than $2,000 in collections ........ Medical bills are excluded.
• Minimum of 2 years from Chapter 7 or 13 bankruptcy discharge
• Minimum of 3 years from Preforeclosure, short sale, deed in lieu, foreclosure from discharge date or release date.

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. Down payment can not be borrowed, from any source.
• 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

Three (3)- and Four (4)-Unit Property

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.

FHA also limits you to a total of 7 units including subject property and all other rental property.

• 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 - 0.8%
• Greater than 15 years & less than 95% LTV - 0.85%
• Less than or = 15 years & Grester than 90% LTV - 0.7%
• Less than or = 15 years & less than 90% LTV - 0.45%

Annual Insurance Premium For High Balance Loan Amounts

• Less than or = to $625,000 & less than or = to 95% LTV - 0.8%
• Less than or = to $625,000 & greater than 95% LTV - 0.85%
• Greater than $625,000 & less than or = to 95% LTV - 0.1%
• Greater than $625,000 & greater than 95% LTV - 0.105%

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.

Questions and comments appreciated!!

This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change.

FHA 203K RENOVATION LOAN

Product Overview

LTV Requirements: Maximum of 110%

1-2 units allowed (3-4 units by exception only)

The Limited 203(k) may only be used for minor remodeling and non-structural repairs.

The Limited 203(k) does not require the use of a 203(k) Consultant, but a Consultant may be used.

There is no minimum rehabilitation cost.

Maximum number of contractors: 3

Repair Limits

• Renovation Total can be up to $35,000 in cosmetic repairs.
• This amount includes: 10% contingency reserve and all fees and costs listed in the fee section.
• Exceptions are not allowed to exceed the repair amount.
• Borrower is not allowed to fund overage.

Allowable Repairs

oRepairs and final inspection completed lesser of 180 days or as approved by the Renovation department

oMaximum repairs $35,000 (inclusive of all financed renovation fees). NO Exceptions.

oRoof: repair or replacement (covering, underlayment)

oGutters/downspouts: install/repair/replace

oInsulation: ceilings/walls/asbestos removal

oSiding/windows/doors

oPaint: interior/exterior/lead paint abatement

oKitchen: all appliances/cabinets/ total

oElectrical: repair/replace/recondition all

oPlumbing: repair/replace/recondition all

oRepair/Replace HVAC or other systems

oRepairing or removing an in-ground swimming pool

oInstalling or repairing fences, walkways and driveways

oFlooring/subflooring/tile/carpet/wood

oTermite treatment/damage repair

oRepairing or replacement of well and septic- *See appraisal section of the guidelines for specific requirements

oWeatherization items/repairs/ improvements

Non-Allowable Repairs

oStructural or requiring engineers report or requiring blueprints

oRepairs performed by the borrower

oNo Detached Garages

oNo Swimming Pool Installations. Pool Repairs are allowed.

oImprovements that do not conform to the surrounding neighborhood

oRepair cost that exceeds $35,000. NO Exceptions.

oAny new construction including room additions.

oLandscaping or similar site amenity improvements.

oAny repair or improvement requiring a work schedule longer than six months.

oRehabilitation activities that require more than two payments per specialized contractor.

oMajor rehabilitation or major remodeling.

oRequired repairs arising from the appraisal that Necessitate a “consultant” to develop a Specification of Repairs/Work Write-Up.”

oRequire plans or architectural exhibits.

oResults in work not starting within 30 days after loan closing.

oBorrower is unable to occupy at closing or within 30 days.

oTelevision antenna and satellite dishes.

oAdditions or alterations for commercial use.

oSFR conversion to a 2 unit

Contingency Reserve

o10% of the cost of rehabilitation

oProperties where the utilities are turned off will require a 20% contingency.

Permits

oIf permits are required to complete the improvements, you must have permits prior to any subsequent draws after settlement. No Exceptions

Borrower Acknowledgment

oParties listed below are not eligible to perform the work:

oBorrower

oFamily Member

oBorrowers Employer

oSeller

oRealtor

oAny Interested party to the transaction

A family member is not allowed to originate or be involved in the loan process

oFamily member as defined below:

oChild (son, stepson, daughter, stepdaughter)

oSpouse

oParent (includes step-parent or foster parent)

oGrandparent (includes step-grandparent or foster grandparent)

oLegally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption

oFoster child

oBrother/stepbrother

oSister/stepsister

oUncle

oAunt

oIn-laws

Fees

oSingle Fee: $550

Conforming Loan Amounts

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

oEach county has its own individual area limit

High Balance Loan Amounts

oMaximum loan amount as determined by FHA (High Balance Loan Limits depending on location and number of units - below)

oEach county has its own individual area limit (refer to the following HUD website)

Upfront MIP

o1.75% of the Base Loan Amount

Monthly MIP

*UNLIMITED AMOUNT OF FINANCED PROPERTIES – MORE THAN 10 FINANCED PROPERTIES ALLOWED. (ONLY 5 LOANS ALLOWED UNDER THIS PROGRAM)

*MINIMUM $100K LOAN AMOUNT – NO EXCEPTIONS

Purchase/Rate & Term Criteria – LTV

1-4 Unit Residential Property

• 85% LTV
  • 660 Credit Score Required
  • $1,500,000 max loan amount
  • 9 months Reserve Requirement
• 80% LTV
  • 620 Credit Score Required
  • $1,500,000 max loan amount
  • 6 months Reserve Requirement
• 75% LTV
  • 620 Credit Score Required
  • $1,750,000 max loan amount
  • 6 months Reserve Requirement
• 70% LTV
  • 620 Credit Score Required
  • $2,000,000 max loan amount
  • 6 months Reserve Requirement

Cash Out Refinance –

1-4 Unit Residential Property

• 80% LTV
  • 640 Credit Score Required
  • $1,000,000 max loan amount
  • 6 months Reserve Requirement
  • Maximum Cash Back $350k

*6 months reserves required for all additional properties.

*Up to 6% Seller Contributions Allowed

* New York and Maine now 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)

OPTIONS FOR POOL INSTALLATION – RENOVATION LOAN

OUTDOOR LIVING AREA’S ALLOWED WITH INSTALLATION OF AN “IN GROUND” SWIMMING POOL AS WELL AS RELATED EQUIPMENT.

HomeStyle; Prior To Completion of the Pool:

• 50% of the “as completed” appraised value + 10% contingency reserve
• Completion Time of 180 days
• # Contractors – Up to 3
• # Draws – Up to 4
• Fee - $650
• Primary Residence - Purchase/Limited Cash Out Refinance –
  • 1 unit properties – Up to 95% LTV
  • 2 unit properties – Up to 85% LTV
  • 3-4 unit properties – Up to 75% LTV
  • Credit Score 680
• Investment Property
  • 1 unit property only
  • 85% LTV for purchase
  • 75% LTV for limited Cash Out Refinance
  • Credit Score 720
• 6 months minimum reserves for 2-4 units and investment purchases
• Must be within conforming limits – No High Balance
• Proposed work can not be done by borrower or borrower’s family members - a non – arm’s length transaction

Prime; Following Completion of the Pool, Pool Escrow:

• Lesser of 35% of the “as completed” appraised value or $85k + 10% contingency reserve
• Completion Time of 120 days
• # Contractors – Up to 2
• # Draws – Up to 4
• Fee - $900
• Credit Score Minimum of 620.
• Work must be a non – arms length transaction
• 1 unit properties or PUD's only.
• Must be within conforming limits – No High Balance
  • 80% - 95% LTV

JUMBO Product; Prior To Completion of the Pool:

• Up to $150k + 10% contingency reserve
• Completion Time of 120 days
  • • # Contractors – Up to 2
    • # Draws – Up to 4
    • Fee - $650
• Lesser of 30% of the “as completed” value or $250k
• Completion Time of 160 days
• First Time Home Buyer Subject to Max loan amount of $1,000,000 AND a min. of 12 months reserves
• Borrowers with a recent mortgage history in previous 3 years Max loan amount of $1,500,000 and 6 months reserve requirement.
• Minimum Credit Score of 720
• 1 Unit properties only
• Proposed work can not be done by borrower or borrower’s family members - a non – arm’s length transaction

Yes, we lend in all state. I do want to make that you are aware for this specific program it is a minimum loan amount of $100k per property.

*UNLIMITED AMOUNT OF FINANCED PROPERTIES – MORE THAN 10 FINANCED PROPERTIES ALLOWED. (ONLY 5 LOANS ALLOWED UNDER THIS PROGRAM)

*MINIMUM $100K LOAN AMOUNT – NO EXCEPTIONS

Purchase/Rate & Term Criteria – LTV

1-4 Unit Residential Property

• 85% LTV
  • 660 Credit Score Required
  • $1,500,000 max loan amount
  • 9 months Reserve Requirement
• 80% LTV
  • 620 Credit Score Required
  • $1,500,000 max loan amount
  • 6 months Reserve Requirement
• 75% LTV
  • 620 Credit Score Required
  • $1,750,000 max loan amount
  • 6 months Reserve Requirement
• 70% LTV
  • 620 Credit Score Required
  • $2,000,000 max loan amount
  • 6 months Reserve Requirement

Cash Out Refinance –

1-4 Unit Residential Property

• 80% LTV
  • 640 Credit Score Required
  • $1,000,000 max loan amount
  • 6 months Reserve Requirement
  • Maximum Cash Back $350k

*6 months reserves required for all additional properties.

*Up to 6% Seller Contributions Allowed

* New York and Maine now 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)

Jumbo Loan Program

Purchase/Rate & Term - Primary Residence

1-2 units

75% LTV up to $2,000,000

80% LTV up to $1,500,000

90% LTV up to $1,000,000

1-4 units

70% LTV up to $2,000,000

Cash Out Refinance - Primary Residence

1-2 units

60% LTV up to $1,500,000 max cash out of $500,000

70% LTV up to $1,000,000 max cash out of $250,000

Purchase/Rate & Term - Second Home

1 unit only

65% LTV up to $2,000,000

70% LTV up to $1,500,000

80% LTV up to $1,000,000

60% LTV up to $1,500,000 max cash out of $500,000

Jumbo Program

1-4 units

75% LTV up to $1,000,000

70% LTV up to $1,000,000

1-4 units

60% LTV up to $1,000,000 max cash out of $250,000

*Investment property purchase can not be a first time home buyer

*Investment property 20, 25, 30 year fixed rate only

*Investment property cash out refinance most contain an attestation for the proceeds from the cash out refinance. 100% of cash must be used for business purposes.

No Mortgage Insurance Requirement

Credit Score Min 680

* FIRST TIME HOME BUYER - a borrower who has not owned a home in the last 3 years

- Max loan amount of $1,000,000 and in CA, NJ, NY or CT max loan amount of $1,500,000

- 680 min. credit score

- Primary Residence financing only

- Max LTV of 80%

* MULTIPLE FINANCED PROPERTIES - may own up to 10 residential financed properties (1-4 units)

- Up to 4 properties owned - Additional financed properties have a 3 month reserve requirement

- Between 5 and 10 financed residential properties

* Maximum of 80% LTV or program max (whichever is lower)

* 6 months reserves required for each additional property

* 6 months reserve required for subject property

*PRIMARY HOME PURCHASE -

* Must not be purchasing or refinancing a new primarywithin 6 monthsof current primary residence.

*RATE AND TERM REFINANCE - If subject property is owned less than 12 months, The LTV is based on whichever is less - the current appraised value or purchase price plus any improvements made.

*PROPERTIES LISTED FOR SALE WITHIN 6 MONTHS - Rate And Term Refinance only (No cash out) Primary and Second Homes only (No Investment Properties)

*Letter of Explanation on the rationale for cancelling the listing

*DELAYED PURCHASE FINANCING - Property must be purchased by borrower for cash

within 6 monthsof the loan application.

*CASH OUT REFINANCE - If property is owned less that 12 months - the LTV is based on the lesser of the original purchase price + documented improvements with receipts or current appraised value. After 12 months the LTV is based on current appraised value.

* Property can not be listed for salewithin 12 monthsof the application date.

* Investment Property Cash Out Refinance must be used 100% for business purposes.

RENTAL INCOME USE AS INCOME:

-Require lease agreements on all rental property used for income

-If Current Property is being converted to Rental Property - must have departure equity of 25%

SELLER CONCESSIONS FINANCING MAXIMUM-

- 6% for primary and second home with LTV <80%

- 3% for primary residence with LTV >80%

- 2% for investment property

The Minimum To Qualify:

- Residual Income Requirements

- Must have a stable 2 year history of income & High Probability to continue for at least 3 years

- Tax transcripts are required for 2 years to verify income.

- W2 Forms

- Paystubs

Escrow Holdbacks - NOT Allowed

OPTIONS FOR POOL INSTALLATION – RENOVATION LOAN

OUTDOOR LIVING AREA’S ALLOWED WITH INSTALLATION OF AN “IN GROUND” SWIMMING POOL AS WELL AS RELATED EQUIPMENT.

HomeStyle; Prior To Completion of the Pool:

• 50% of the “as completed” appraised value + 10% contingency reserve
• Completion Time of 180 days
• # Contractors – Up to 3
• # Draws – Up to 4
• Fee - $650
• Primary Residence - Purchase/Limited Cash Out Refinance –
  • 1 unit properties – Up to 95% LTV
  • 2 unit properties – Up to 85% LTV
  • 3-4 unit properties – Up to 75% LTV
  • Credit Score 680
• Investment Property
  • 1 unit property only
  • 85% LTV for purchase
  • 75% LTV for limited Cash Out Refinance
  • Credit Score 720
• 6 months minimum reserves for 2-4 units and investment purchases

Prime; Following Completion of the Pool, Pool Escrow:

• Lesser of 35% of the “as completed” appraised value or $85k + 10% contingency reserve
• Completion Time of 120 days
• # Contractors – Up to 2
• # Draws – Up to 4
• Fee - $900
• Credit Score Minimum of 620.
• Work must be a non – arms length transaction
• 1 unit properties or PUD's only.
• Must be within conforming limits – No High Balance
  • 80% - 95% LTV

JUMBO Product; Prior To Completion of the Pool:

• Up to $150k + 10% contingency reserve
• Completion Time of 120 days
  • • # Contractors – Up to 2
    • # Draws – Up to 4
    • Fee - $650
• Lesser of 30% of the “as completed” value or $250k
• Completion Time of 160 days
• First Time Home Buyer Subject to Max loan amount of $1,000,000 AND a min. of 12 months reserves
• Borrowers with a recent mortgage history in previous 3 years Max loan amount of $1,500,000 and 6 months reserve requirement.
• Minimum Credit Score of 720
• 1 Unit properties only
• Proposed work can not be done by borrower or borrower’s family members - a non – arm’s length transaction

*UNLIMITED AMOUNT OF FINANCED PROPERTIES – MORE THAN 10 FINANCED PROPERTIES ALLOWED. (ONLY 5 LOANS ALLOWED UNDER THIS PROGRAM)

*MINIMUM $100K LOAN AMOUNT – NO EXCEPTIONS

Purchase/Rate & Term Criteria – LTV

1-4 Unit Residential Property

• 85% LTV
  • 660 Credit Score Required
  • $1,500,000 max loan amount
  • 9 months Reserve Requirement
• 80% LTV
  • 620 Credit Score Required
  • $1,500,000 max loan amount
  • 6 months Reserve Requirement
• 75% LTV
  • 620 Credit Score Required
  • $1,750,000 max loan amount
  • 6 months Reserve Requirement
• 70% LTV
  • 620 Credit Score Required
  • $2,000,000 max loan amount
  • 6 months Reserve Requirement

Cash Out Refinance –

1-4 Unit Residential Property

• 80% LTV
  • 640 Credit Score Required
  • $1,000,000 max loan amount
  • 6 months Reserve Requirement
  • Maximum Cash Back $350k

*6 months reserves required for all additional properties.

*Up to 6% Seller Contributions Allowed

* New York and Maine now 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)

For 2018....

FHA Basic standard mortgage limits are:
Single - $294,515

Duplex - $377,750

Triplex - $455,800

Fourplex - $566,425

Conforming FHA Basic High Cost area limits are:

Single - $679,650

Duplex - $870,225

Triplex - $1,051,875

Fourplex - $1,307,175

Maximum Conforming limits are below (If Your Area Qualifies, For Specialty Financing);

Alaska & Hawaii

1 unit - $1,019,475

2 unit - $1,305,375

3 unit - $1,577,800

4 unit - $1,960,750

House Hacking With An FHA Mortgage - FHA Financing;

Maximum Financed Properties - To qualify (Including investments) - 4 including subject!

This is an Owner Occupied Mortgage Product.

2018 FHA Mortgage Loan Limits From Floor -Ceiling

2018 Cities & Counties at Ceiling Limit

FHA Mortgage Limit Look Up For 2018

Inducements to Purchase

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

Credit Requirements & Derogatory Remarks

• Required is 600.
• Minimum of 2 trade lines are required
• No more than $1,000 in disputed collections
• Must be all on time payments in the past 12 months of mortgage history
• No more than $2,000 in collections ........ Medical bills are excluded.
• Minimum of 2 years from Chapter 7 or 13 bankruptcy discharge
• Minimum of 3 years from Preforeclosure, short sale, deed in lieu, foreclosure from discharge date or release date.

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. Down payment can not be borrowed, from any source.
• 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

Three (3)- and Four (4)-Unit Property

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.

FHA also limits you to a total of 7 units including subject property and all other rental property.

• 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 - 0.8%
• Greater than 15 years & less than 95% LTV - 0.85%
• Less than or = 15 years & Grester than 90% LTV - 0.7%
• Less than or = 15 years & less than 90% LTV - 0.45%

Annual Insurance Premium For High Balance Loan Amounts

• Less than or = to $625,000 & less than or = to 95% LTV - 0.8%
• Less than or = to $625,000 & greater than 95% LTV - 0.85%
• Greater than $625,000 & less than or = to 95% LTV - 0.1%
• Greater than $625,000 & greater than 95% LTV - 0.105%

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.

Questions and comments appreciated!!

This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change.

Home Ready Program allows you to purchase your first home and use potential rental income without a mortgage history or experience and is income based in many situations.

Home Ready Program - First Time Home Buyer Program.

Fannie Mae's Home Ready Program

620 Minimum Credit Score

Required https://homeready-eligibility.fanniemae.com/homere... *********