Home buyers that meet HUD's income, credit and asset requirements for an FHA insured loan can also qualify for a gift which can be used for their 3% down payment which is the minimum down payment required by HUD. This gift comes from a non-profit 501(c)3 charitable foundation and never has to be repaid. The only other requirements are Seller/Builder participation and a nominal processing fee ($300-$600) which can be paid by the Buyer, Seller or Lender.
FHA will insure loans up to 97% of the purchase price or appraised value, whichever is lower. The max they will lend vary from county-to-county. Look up your areas limits on HUD's website.
General FHA guidelines:
- No Minimum Credit
- 620+ needed for new Jumbo FHA loans.
- 500 or No FICO is possible, but subject to serious pricing hits and you may need some good compensating factors such as a DTI ratios and/or 6 months or more of housing payments in reserves.
- 31/43 DTI Limits.
- 31% Back End Ratio which is your new monthly housing expenses divided by your GROSS monthly income. Housing expenses include: Mortgage Payment, Property Taxes, Property Insurance, PMI and your Homeowners Association Dues if you live in a condo or other community that require it.
- 43% Front End Ratio takes your new monthly housing expenses PLUS any other monthly expenses that may appear on your credit such as: Student Loan Payments (defered or not, consult your Loan Officer), Car Payments (unless you have 10 months or less left on your loan), Credit Card Minimum Payments and anything else that may be reporting such as Child Support, Alimony, etc.
- DTI's in the 50's and even 60% ranges can possibly be approved with appropriate compensating factors such as High FICO scores, Low LTV (Loan-to-Value) and/or Significant Assets remaining after close.
- No Minimum Assets
- There really isnt a minimum requirement for assets, just enough to close escrow and maybe $500. As noted above, higher LTVs, higher DTI and lower FICO's may require more Assets.
- Owner Occupancy
- Borrower must live in the property. FHA allows non-owner occupied properties to be refinanced as long as the loan currently in place is an FHA and it is a Streamlined Refinance (i.e. no money is being taken out.)
- Borrower must live in the property. FHA allows non-owner occupied properties to be refinanced as long as the loan currently in place is an FHA and it is a Streamlined Refinance (i.e. no money is being taken out.)
- Property Types
- Single Family and 2-4 Units are allowed as are Rural Properties and Double-Wide Manufactured homes. Each property type has their own unique requirements, please contact your Loan Officer for more information.
- Loan to Value
- FHA will insure a loan that is 97% the value of the home but will allow 100% or even 103% CLTV (Combined LTV) with a 3% or 6% outside 2nd mortgage. These 2nd loans are hard to come by but are very popular when the Seller contributes closing costs by wants to get repaid at a later date or slowly over time.
- Non-Occupant Co-Borrowers
- FHA will allow co-signers that do not intend to occupy the property.
- The Non-Occupant's income will be added to the pot for DTI qualification but their liabilities will also be included.
Please feel free to drop me a line if you have any questions!
I live in a small community on the Central Oregon coast (Yachats,25 miles so. of Newport.) My fiance' and I are interested in the non-profit GIFT program. To download information I was asked questions, such as County Code and MSA Code, etc.
The help information on these things didn't help me understand what was required. I have started westernbarbque,LLC and am looking for a home that could also serve as a production site for Dangerous Dennis' Bar-B-Que Sauce. Is this possible with the grant? Finding help on gov. grants has not been easy nor has been finding someone that has any experience in the field.
Thanks , Dennis West
westernbarbque@yahoo.com
Dennis,
I am not 100% clear on your question. To clarify, the Government approved grant program is for Owner-Occupied Single Family and 2-4 Unit properties. If you are looking for commercial space for production, this isnt for you. If you are looking for a home to purchase and use the basement or garage as a 'kitchen' to produce your bar-b-que sauce, I do not think this would be a problem. I have never seen an FHA or other disclosure asking if you intened to mass produce condiments in your home.
Please let me know if this is what you have any questions about this.
If your interest is in purchasing a wharehouse, commercial building, kitchen, then other programs (not as enticing) may be available for you. First check with your local chamber of commerce for any grant programs. There may be City, State or Federal programs for new businesses. If you have sufficient liquid assets, you may also consider purchasing hte building.
Please feel free to email me any questions.
Michael Wolff
Hi,
I am curious. If I become a non-occupant co-signer for my sister, what is the liability to me? Her financial advisors are saying that at the time of closing I would sign an affidavit stipulating that I am in no way responsible for the mortgage, it is completely her responsibility and will not affect my credit an any way. The advisor is also saying that the mortgage will not appear on my credit history nor will it affect any purchase I may plan to make in the future.
It sounds too good to be true - there has to be some drawback.
Thanks for any help -
Kristina McCann
NY, NY
Kristina,
I always tell people to go with their 'gut instincts' ESPECIALLY when it 'sounds too good to be true'.
Your sisters Financial Advisors are NOT lawyers and are not the lenders so what gives them the authority to tell you what the contract with the lender really means? You are co-signing which means you are putting your butt on the line for your sister. If this loan had no affect on your credit or credit history, why would you even be needed?
The affadavit MAY end up benefiting your sister down the road should ownership of the property ever come into question, BUT it has no affect on how the lenders report your credit.
Will this affect you buying a home down the road? Perhaps. Underwriting Guidelines are always changing so there isnt a definite answer. You may be hit for none or a portion of the payments on that mortgage and if you currently DONT own a home, you may not be considered a 'first time homebuyer' when you finally do take that plunge yourself.
Please don't hesitate to email/call me if you need any clarification on this.
Best,
Michael Wolff