I have now been writing this article for about 5 years and if I have learned anything in those years and my first 26 + years in this business, I have learned that you need to repeat what you said before because a segment of people did not hear it or comprehend it the first time around. Today will be a lesson about basic loan programs and how they work. I know this sounds simple, but read through and see if you learn anything.
- FHA loans – 3.5% minimum down. They charge an Upfront Mortgage Insurance Premium of 1.75% and you will have a monthly PMI that will be with the loan for the life of the loan unless you put down over 10%. Then the PMI would go away automatically after 11 years. Loan amounts in LA County are up to $636,150.00. You can do up to 4 units as owner occupied and the loan amounts increase with more units. Maximum Loan amount with 4 units is $1,223,475. FHA has a 3-year seasoning on Short Sales and Foreclosures, and only 2 years on Bankruptcy Chapter 7. If your clients are in a Chapter 13 and have paid for 1 year then they can get an FHA loan with court approval. You can do fixed rates for 30, 20, and 15 years. You can do variable rates that are fixed for 3, 5, and 7 years. Buyers can go to 56.99% Debt-to-income ratios. There is much more to these loans, but this is the basics.
- Conventional Loans – Fannie Mae and Freddie Mac – Minimum 3% down for 1st Time Buyers, 5% down for people who have owned in the past 3 years. The maximum loan amount is $424,100 for 3% down and $636,150.00 for 5% down. All of these loan programs have the ability to do loans with no PMI as long as the buyer has good credit scores. The maximum Loan amount with 4 units is $1,223,475, but a buyer would need to put 25% down for a 3 or 4 unit and only 10% down for a 2 unit. There is a 4-year seasoning on a short sale, 7 years on a foreclosure, with some wiggle room for exceptions, and 3 years on a Chapter 7 Bankruptcy. You can do fixed rates for 30, 25, 20, 15 and 10 years. You can do variable rates that are fixed for 3, 5, 7, and 10 years. Buyers can go to 50.00% debt-to-income ratios with Fannie and 50.49% on Freddie Mac. Again, there is much more to these loans, but these are the basics.
- VA Loans – VA Loans are the best loans on the market. VA Charges a VA Funding Fee to all Veterans that left the Military with no disabilities. If a Veteran left with a disability then there would be no VA Funding Fee. A Veteran can buy a property with a loan amount up to $636,150.00 with no money down and if they want to go above that amount then they will have to pay $1.00 for every $4.00 they spend above the loan limits in their county. I used to think that the loan limit was $1,000,000.00, but it looks like we can go over $2,000,000.00 or even more! VA has 2-years seasoning on a Short Sale and Foreclosure, but they will look at a loan after 1 year with extenuating circumstances. Bankruptcy waiting period is 1 year and a Chapter 13 is 1 year of payout with court approval, just like FHA. VA uses a residual income calculation to qualify buyers and it is based on the amount of people in the house and how much money is left over after the payments are made. You can do fixed rates for 30, 20, and 15 years. You can do variable rates that are fixed for 3, 5, and 7 years.
All of these programs can go with the 20% First time Buyer credit that we are offering and these loans above are about 95% of what we do on the loan side. Please let me know if you have any questions.
25129 The Old Road, Suite 350, Santa Clarita, CA 91381
Phone 661-260-2970 Fax 661-554-7121
Email – Mike@AugustaFinancial.com