So you are looking for a mortgage to help purchase your new home or to refinance your current home. You have spoken to a loan officer and find out that you can't obtain a FHA loan for several different reasons. Some of these reasons might be ....
- You don't show enough money as income
- You don't have the 3.5% down payment that is required
- You are not a U.S. citizen, so what are your options?
- How can I get money to fix up my home?
So what are my other options out there to help me obtain financing for my home? Let's take a look what is still out there. The types of mortgages that I will be mentioning are for primary residences only.
Types of mortgages or FHA loans :
- FHA Mortgages : This is not just for those that have less than perfect credit. Up to 6% seller concessions allowed. Also, better relaxed guidelines when it comes to CH 7 & CH 13 bankruptices. Also allowing for better cash-out scenarios. Just a very solid loan and depending on the down payment, the rates are usually better than conventional loans with credit scores less than 700. Please read : FHA loans vs convnetional loans - the true numbers
- Conventional Mortgages : Very tough to describe because you need to be approved in the underwriting system, which is usually DU or LP. FHA loans can still be manually approved, conventional loans can't. And there are PMI issues and those properties in declining market areas.
- VA loans : For those veterans with 3 months of service in war time and those with 2 + years non-war time. Allows for 100% financing and 4% seller help. No monthly mortgage insurance.
- USDA loans : Allows for 100% financing and there are no specific percentages when it comes to seller concessions. It is more cost specific. You don't have to be a first time homebuyer. There are income restrictions and property area restrictions. No monthly mortgage insurance.
- Stated Loans / NINA loans / No doc loans : I mention all 3 because some people get the terms confused. There really aren't any strong stated or no doc loans left in today's market. But I still have access to a very good NINA loan, which stands for no income and no assets. Which means you still need to show a job. And you can still do cash-out loans with this mortgage.
Quick product outline :
70% LTV on purchases - credit scores above 700 65% on rate & term refinances
60% LTV on purchases - credit scores from 651 - 700 60% on rate & term refinances
50% LTV on purchases - credit scores from 600 - 650 50% on rate & term refinances
Subordinate financing allowed - for LTV's greater than 65% LTV, max CLTV is 80%. These LTV percentages are for loans up to 1 million dollars. There are program LTV's for loans above 1 million.
There are restrictions that apply to different states and counties. There are tradeline differences & property restrictions. All of this will be talked about in a separate blog later this week.
- Foreign National Loans : These loans are for those individuals that are not U.S. citizens. There are different variations to this program depending on your credit scores and if you have U.S. credit or without U.S. credit. For those without U.S. credit, you need to reduce all LTV's by 20%.
Quick product outline : For those with U.S. credit
70% LTV on purchases - credit scores above 700 65% on rate & term refinances
60% LTV on purchases - credit scores from 651 - 700 60% on rate & term refinances
50% LTV on purchases - credit scores from 600 - 650 50% on rate & term refinances
No cash-out allowed on these programs.
- FHA 203-K loans - This is consider like a rehab loan for both purchases and refinances. There are 2 main types of the 203-k loan.
The 203-k loan - There is no loan restriction limits except those set by the HUD for the FHA county limits, for the maximum mortgage amounts. (meaning, how much you can borrower to fix up the home) The main difference is that you can use this money to even for the foundation & that you need a HUD consultant to review the costs.
The 203-k streamline or the streamline 203-k - You can borrower more than $35,000 for repairs and it can't be used for the foundation. The other major difference is that you don't need a HUD consultant to clarify the costs of the repairs.
Overall, these are just the basic details. Some of what is mentioned above is what I have available to my borrowers and could be different from other lenders. There are also state and local grant programs and other types of loans, but they are more detailed and state specific. For more information on these loans mentioned above, please don't hesitate to contact me at : jbelonger@ihmci.com
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- Mortgages -
Experience & Knowledge at its BEST !!!
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!
Copyright © 2009 by Jeff Belonger
Excellent article, Jeff. This is timely for many folks, to give them a snapshot of the current products available. Mind if I reblog?
Good info Jeff. Turns out that this is the last 3 blogs in my subscriptions... Erica and Jason Reblogged it. I was going to as well but I haven't figured out how to do that. I am a little tech challenged. good stuff though!
Jeff: Thank you. I appreciate you pointing out all the programs. I'd like to add that both Fannie Mae and Freddy Mac are upping the credit score requirements for government loans to 620. It appears all lenders are following suit. As we both know, USDA and especially VA were not subject to credit scoring as much. That is no longer the case. Thanks again. Have a great day!
It's posts like these that make me happy that you are close! All this mortgage talk makes my eyes glass over. Solid mortgage professionals are a big value to my team!
Jeff, I've bookmarked this post for reference purposes. Excellent information. One question though...why would a NINA loan (no income no job) require a job? Thanks for posting this to Blogger's Choice. It's great info & worthy of a Feature!
JASON..... . I think it's timely to show what is truly left out there. I don't think I really left anything off, but if I did, I hope someone tells me. thanks for the compliment and yes, you can reblog this. thanks
MICHAEL.... . how funny is that.... hhhhmmm... good things come in 3's, right? Besides, 3 and 7 are my lucky numbers. ;o) But reblogging this is not tough... just go to the reblog icon and click on it... the rest is simple. thanks
PAUL.... . thanks for stopping by. But I am semi confused about what you stated in regards to Fannie & Freddie upping their scores to 620 on gov't loans. HA is a ginnie pool and some investors can sell at lower credit scores. But overall, yes, 620 seems to be the magic number for most. thanks
KRISTA.... . well, I am glad that something like this makes you happy. You must be easy to please.... just wait until I help one of your clients. ;o) Seriously, thanks for the kind words... too bad we didn't get to meet a few weeks ago.
LOLA.... . I didn't really define the differences between stated, NINA's, and no docs just so people would ask. You need a job for a NINA loan. NINA stands for no income and no assets, but you still need to have a job and verify this. A No Doc is where you don't need a job at all, because you aren't documenting anything. Thanks for asking... and thanks for the polite compliment.
Jeff - This is a nice, concise snapshot of what is out there and a good description of what is out there. FHA is king in our market. I think we may also be seeing more of the FHA 203K. It is great to see that there are still some NINA loans out there for the self-employed folks but those LTVs require a large downpayment. I guess having a product available is better than no product at all. ~ Chris
We do a fair number of USDA loans these days and they are a great option. They still are willing to look at a loan based on whether it makes sense. My concern is that the perception of 100% financing is getting scrutinized quite a bit lately. I know USDA has a great program for rural communities but I don't think anyone else does. I was watching CNBC last night and saw a rerun of an interview with Jim Cramer and FDIC chair Sheila Bair in which she told a caller that had said they were offerred a 100% financing loan that she wanted the name of that lender because that is not possible in this market implying that this was a shady lender. It is a mystery to me how someone in such a position can have such a lack of knowledge of mortgage products especially when they are offered by the US government. Did anyone else hear this?
Jeff, as always - valuable mortgage information for the public. You need to run for congress - we need some smart folk up there.