General FHA Requirements
1) 1-4 Unit, Condo and PUD Owner occupied properties only.
2) All loans subject to FHA loan limits by state and county (visit www.hud.gov)
3) No Cashout refinances and purchases Max LTV 97.75%
4) Cashout refinances 1-2 unit Max LTV 95%
a. Cashout with 30 or 60’s on mortgage Max LTV 85%
5) Cashout refinances 3-4 Max LTV 85%
6) No reserves on ALL refinances. ALL LTV’s, ALL property types, Purchases 1-2 unit
7) 3 month PITI required on 3-4 unit purchases ONLY (No gifts)
8) Gifts permitted and are considered borrowers own funds (Except on #7 above)
9) NO government loans in default
10) NO credit, NO credit score subject to ML 2008-11 on non traditional credit
11) Debt Ratio 31/43 or as approved by DU
12) 6% seller concession on all purchases
13) Non Occupant co morgagor ok subject to LTV restrictions
14) Minimum FICO 550
15) FICO 550-580 approve/eligible only, no cash out loans, max DTI 43%
Full Doc Only
Wage Earner
1) 2 yrs W2’s and current paystub (4506 is required and checked prior to close)
Self Employed Sole Proprietor
1) 2 yrs signed and dated tax returns (all schedules)
2) YTD P&L from accountant
Self Employed Partnership or S Corp
1) 2 yrs signed and dated Personal and Business tax returns (all schedules)
2) YTD P&L from accountant
General Notes
1) 2 yrs continuous employment necessary for primary borrower
2) Part time job can be 1 yr minimum
Additional Guides For Jumbo Base > $417K
1) Cash out max 85%
2) Rate/Term or Purchase 95% LTV or greater, a 2nd appraisal is required. 2055 ok on one unit property. If variance is greater than 5%, lower value will be used. 2nd appraisal must be ordered by NDM.
Foreclosure/Deed in Lieu
1) Foreclosure seasoning based on sale or payoff date
2) Deed in Lieu seasoning is based on completion date of the action
3) Generally borrower must have no Foreclosure or Deed in Lieu in previous 3 years
a. if foreclosure was result of extenuating circumstances beyond the borrowers control and borrower has re-established credit since the foreclosure loan can be reviewed for exception.
Bankruptcy
1) Chapter 7 must be discharged minimum of 2 years
2) Chapter 13 ok with a minimum of 12 months in BK and 0x30 pmt history to trustee
3) Required docs included:
a. Evidence plan has been confirmed b. Trustee rating
c. Written demand from trustee
d. Notice of Right to Encumber or Trustee Letter from court (written approval)
e. No major lates after bankruptcy
Compensating factors for Exceptions (Such As DTI)
1) Amount of down payment. Putting down 10% instead of 3%
2) Debt ratios significantly under the maximums
3) Strong credit or credit scores
4) Time on the job
5) Time at current residence.
6) Down payment saved by the borrower verses a gift
7) Reserves
8) Minimal payment shock
9) No recent derogatory accounts
Down Payment Assistance Plan
Neimiah or Ameridream only; max 3%
Appraisals
1) Appraisal must be done by an FHA licensed appraiser
2) Appraiser used to open case number must be used (or get approval by NDM)
3) Case number must appear on all pages of appraisal
4) Side photos required