Recently I received an FHA approval for a couple with a credit score of 603. In the past few months I have seen an easing in the credit policies of both conventional and FHA loans and that’s encouraging. Normally, FHA lenders requires at least a 620 credit score to get anything approved. We now have lenders who will do FHA loans for borrowers with credit scores down to 580.
These particular borrowers had a few collections, but their high credit card balances were killing their credit scores. It did help that they had a low debt to income ratio.
Keep in mind: conventional loans, regardless of the down payment still require a credit score of 620 per Fannie Mae and Freddie Mac guidelines.
Showing posts with label fannie mae. Show all posts
Showing posts with label fannie mae. Show all posts
Monday, August 10, 2015
Monday, July 20, 2015
A conventional 97% loan from Fannie Mae
A conventional 97% loan is a Fannie Mae home loan that allows home buyers to purchase a home with a 3% down payment and get a loan amount up to $417,000. It is designed for 'first time home buyers' who may not have the resources for a large down payment. A 'first-time home buyer' is defined as a person who has not owned a home in the last three years.
Another great feature of this program is that the entire 3 % down payment can come in the form of a gift from a relative.
Closing costs can be paid by the seller with a limit of 3% of the sales price.
Compare the Conventional 97 to a FHA loan and you will find a lot of benefits to the Fannie Mae product. The FHA mortgage requires a 1.75% upfront mortgage insurance premium usually added to the loan amount, Conventional 97 does not. The monthly MI on a FHA loan stays on the mortgage for the life of the loan. The Conventional 97% MI will drop off after the loan balances reaches 78% of the original appraised value. FHA is restricted to $271,051 whereas the Conventional 97% program allows loan amounts up to $417,000. FHA does have some advantages, especially for borrowers with lower credit scores and past foreclosures and bankruptcies.
I can guide your clients through the advantages and disadvantages of both the FHA loan and Conventional 97% product.
Another great feature of this program is that the entire 3 % down payment can come in the form of a gift from a relative.
Closing costs can be paid by the seller with a limit of 3% of the sales price.
Compare the Conventional 97 to a FHA loan and you will find a lot of benefits to the Fannie Mae product. The FHA mortgage requires a 1.75% upfront mortgage insurance premium usually added to the loan amount, Conventional 97 does not. The monthly MI on a FHA loan stays on the mortgage for the life of the loan. The Conventional 97% MI will drop off after the loan balances reaches 78% of the original appraised value. FHA is restricted to $271,051 whereas the Conventional 97% program allows loan amounts up to $417,000. FHA does have some advantages, especially for borrowers with lower credit scores and past foreclosures and bankruptcies.
I can guide your clients through the advantages and disadvantages of both the FHA loan and Conventional 97% product.
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