Virginia State Mortgage VHDA Increases To 50% DTI Change 2009

 

VHDA Changes to Maximum Qualifying Ratios

New Changes to the Maximum Debt to Income Ratio 50.00% for all VHDA Loans which was upped from 43%.  This will allow more people to qualify with limited income.  This is great news! Below are the official changes taking place Feb 2009.

All VHDA loans (including FHA, VA, RHS, PMI or uninsured loans) will be limited to a maximum of 50.00% debt to income ratio when using an automated underwriting Approve/Eligible Decision.

Stated program ratio guidelines will apply for manually approved loans. This new restriction is effective for loan reservations made beginning February 1, 2009.

FHA Plus: (103% Financing)

VHDA will continue to accept FHA Total Scorecard approvals for FHA Plus with the following limitations:

Loans may exceed FHA’s standard ratio requirements of 31% payment to income and 43% debt to income (to a maximum of 50% debt to ratio) only if the applicable credit score is 620 or above.

Credit scores below 620 and non traditional credit must adhere to the maximum 31%/43% FHA program ratios. 

This new requirements are effective with loan reservations made beginning February 1, 2009. 

Reminder: FHA Changes Effective Jan 1st 2009 Highlights

Reminder: FHA Changes Effective Jan 1st 2009 Highlights

Changes

• Maximum LTV Financing: The required cash down payment will be 3.5% of the appraised value or the sales price (whichever is less). Closing costs may not be used to meet the minimum 3.5% cash down payment requirement.
• Maximum base mortgage amount: For purchase loans, the maximum base mortgage loan amount will be 96.5% of the appraised value or the sales price (whichever is less). (Upfront Mortgage Insurance Premiums (UFMIP) may still be financed in the loan)
• Maximum refinance LTV amount*: the maximum refinance LTV will be 97.75% of the appraised value. This LTV will replace the High-Cost/Low-Cost Factors in the maximum loan calculations. 

Note: although a Mortgagee Letter has not been published as of the deadline for this article, the FHA previously indicated that 97.75% LTV will be published and effective on Jan 1, 2009. Any other changes announced in the Mortgagee Letter will be analyzed and communicated as soon as possible.

Note:At this time, the revised LTV does not impact: 203(h) for disaster victims & HUD 184 for Native American loans

Virginia Fannie Mae and Freddie Mac Loan Limits for 2009

 

CONFORMING LOAN LIMIT FOR U.S. TO REMAIN $417,000 IN 2009.

Other Loan Limits vary by different counties. 

 

Below are the major limits for the State of Virginia.

Alexandria $625,500

Williamsburg – $458,850

Richmond – $535,900

Hampton – $458,850

Newport News – $458,850

Portsmouth – $458,850

Suffolk – $458,850

Chesapeake – $458,850

Norfolk – $458,850

Virginia Beach – $458,850

 

Bottom line is that if you have a higher loan amount than these loan limits then its kicked over to classification “Jumbo or Non-Conforming” status which is usually more stricter mortgage guidelines and higher rates normally.

FHA Co-Signers & Co-Borrowers Continued 411 Mortgage Loan

FHA Co-Signer / Co-Borrower Family

FHA Co-Signers & Co-Borrowers Continued 411

This post is a continuation post from FHA First Time Home Buyer Cosigner Kiddie Condo Loan

Most people refer to this loan as the Kiddie Condo Loan because the main concept was to help your children with buying a first house or help out with the housing while your children are gone for college.

Well interestingly enough this guideline also serves another purpose.

Co-Signer / Co-Borrower to help with Income and Debt-To-Income Ratios

I had a client that was having trouble getting FHA approved for his new home purchase.  He tried 3 different ways and the 3rd time he finally got approved and here’s how.

1st Time – My client Mr. Livingston was applying for a standard FHA loan, all seemed pretty normal until his Federal Student Loans came up in the Debt-to-income guideline.  Mr. Livingston had about 10 outstanding Federal Student Loans.  Now normally the student loans will not be counted towards the client’s ratios if the Student Loans were “Deferred Payments”.

When I questioned Mr. Livingston if the Student Loans were deferred, he told me they were but there was 1 problem.  The deferrment period was every 6 months instead of every 12 months.  Within guidelines we had to count the Student Loans as debt and therefore made Mr. Livingston’s Debt-To-Income too high.

FHA Father Son

2nd Time (The Family Co-Signer / Co-Borrower) – This time we utilized the Non-Occupying Co-Borrower / Co- Signer of Mr. Livingston’s Father.  Per FHA guidelines we don’t have to have the Parent’s to move in this house as the primary residence, they could just help by co-signing for income purposes.

Normally this would work out great!  Unfortunately for Mr. Livingston’s situation, his Father actually brought on more debt that didn’t help much on the ratios, even though we were adding more income we still have to include the Father’s debt too.

3rd Time (The Long-Time Friend) – This is very powerful not only is the Co-Signer and Co-Borrower only limited to Family Members, per FHA guidelines you can add Friends too!  Mr. Livingston had a life-long friend who agreed to co-sign and help out Mr. Livingston (what a great friend) this time around it worked, the ratios were good and debts were good.

Now the Friend does have the Debt included in his credit report now as a Real Estate Mortgage he owes on.  So now if he wants to buy a house, he has to keep in mind to get removed from this loan by Refinancing Out from the loan.

FHA Cash to Close Savings Plan – Alternative to FHA Down Payment Assistance 411

 

FHA Cash to Close Savings Plan

 

FHA Cash to Close Savings Plan – Alternative to FHA Down Payment Assistance 411

Borrowers are eligible to save cash to close during the construction period. The following criteria and documentation must be adhered to:

• Borrowers must provide a written statement as to how they intend to save the funds to close.
• A monthly savings plan that identifies the borrower’s savings plan for the funds needed for closing must be completed in its entirety.
• This form must be included in the file submitted to Underwriting. The underwriter has the final decision of the borrower’s eligibility for this program.
• The funds saved must be held by a disinterested 3rd party. The funds cannot be held by Wells Fargo, but can be held by Wells Fargo Bank.
• Credit approval will be subject to the completion and verification of the approved savings plan.
• Gift funds are not allowed after Underwriting has issued a credit approval; however, exceptions to this may be allowed on a case-by-case basis.
• The underwriter must document the file accordingly. All funds must be saved in accordance with the approved savings plan.

The Cash to Close 411!

The FHA cash to close savings plan is a way to get pre-approved for a Construction loan being built without having the liquid assets at the time of application.  This is a great way to Buy Now & Save Later.

New Construction Down Payment Assistance Program – Builder Grant 100% LTV

The Down Payment Assistance Program that has been here forever and is not going anywhere

Worried about the economy? Worried about Down Payment Assistance Programs are gone or on the rocks?

I still can provide Down Payment Assistance Programs STILL and FREE through our FREE Builder Grant Loans.

The way it works is just like any Down Payment Assistance Program you have used in the past (Nehemiah, Ameridream or Genesis)

Quick Recap for those who haven’t:

• A Way for the Seller to contribute towards the down payment which is normally not allowed on Government or Conventional Concessions. Normal concessions only contribute towards Closing Costa dn Pre-paids.

Builder Grant Program Perks:

1. Can contribute up to 6% of the Sales Price
2. NO TRANSFER FEE (unlike most DAPS which charge between $300-$400 dollars)
3. Transferred on the HUD at closing
4. Less Paperwork and Less Stressful

So if you are a Builder or a Home Buyer looking for a new alternative to Financing New Construction Homes without giving away the bank and still want to take advantage of 100% LTV loans then contact me today for further information.

FHA Chapter 7 & 13 Bankruptcy Mortgage 411

Hope is not lost if you filed for Bankruptcy or have been discharged from a Bankruptcy.

FHA Bankruptcy

Whats great about FHA loan programs is that they are backed by our Government, Easier to Qualify and help with Less than Perfect Credit borrowers.

FHA understands that nobody is perfect and realizes that filing for Bankruptcy does not mean your not applicable for credit.  FHA reviews all credit applicants based on your repaying profile and background.  Even though you may have had hiccups in the past as long as you are able to re-establish a track history of paid on time agreements or even document an isolated time frame that resulted in excruciating circumstance.

With that being said what can you do with borrowers who filed for Bankruptcy? Take a look below…

Chapter 13 Bankruptcy 411

• Must have paid on time with the Bankruptcy for 12 complete months.
• Must obtain permission for the courts to refinance or purchase a home.  Must have trustee sign off and finally the Judge to sign off final approval.  Typically the Trustee charges $500 added to the HUD statement at closing to deliver this permission for the courts.
• Must establish 2-4 paid as agreed tradelines other than the bankruptcy.
• Must write a letter of explanation why you filed bankruptcy and what steps have you done to correct your credit default.

Chapter 7 Bankruptcy 411

• 24 months must pass from the time of Discharge Date of the borrower/spouse in order to apply for a FHA loan.
• Must establish 2-4 paid as agreed trade lines other than the bankruptcy.
• Must write a letter of explanation why you filed bankruptcy and what steps have you done to correct your credit default.

If you have any questions or comments please feel free to respond!

How to cancel your FHA Mortgage Insurance Premium

How to cancel FHA Annual Mortgage Insurance Premiums after January 1st, 2001.

• 15-30 Year Term Mortgage: Homeowner reaches 78% Loan to value on house and has paid a minimum of 5 years.

• 0-15 Year Term Mortgage with loan to value 90% or more: Homeowner reaches 78% Loan to value on house with NO minimum paid annual mortgage premiums.

• 0-15 Year Term Mortgage with loan to value 89.9% or less: will be cancelled

FHA will determine when a borrower has reached the 78% loan to value ratio based on the lower of the sales price or appraised value at the time of the sale. New appraised values will not be considered.

When the homeowner has made additional principal payments, the borrower may request cancellation of his/her mortgage insurance if the loan to value ratio has reached 78%, has paid mortgage insurance for at least 5 years and has not been delinquent for more than 30 days at anytime
within the prior 12 months.

Hopefully these quick tips and guidelines can help determine to cancel the mortgage insurance premiums with FHA.  Keep in mind these guidelines don’t apply to conventional PMI guidelines that will be explained in my next post.

FHA is still a great loan being used still because of the government backing pretty much guaranteeing you a refinance in the future via the Streamline product unlike conventional loans nowadays which have resulted in losses due to not being able to refinance out.