Family member allowed to sign as non-occupying co-borrower!
May be a 1 st time homebuyer
May have bruised/lack of credit
May have minimal down payment
Comparison of FHA and Conventional Loans Stringent stand-alone ratios apply for primary borrower when non-occupant co-borrower is applicable No stand-alone ratios apply for primary borrower Stand-Alone Ratios: Ratio calculations more rigid. Ratio calculations more flexible Ratio Calculations: Household income calculations more rigid Household income calculations more flexible Income Calculations: Conventional: FHA:
FHA/Conventional Comparison continued Often 2-month PITI reserve requirement. Typically NO 2-month PITI reserve requirement. Reserve Requirements: May allow non-occupant co-borrowers but there may be additional qualifying restrictions (e.g. additional ratios for occupant co-borrowers). Allows non-occupant co-borrowers without additional qualifying restrictions. Non-occupant co-borrowers: Typically 5% must be from borrower's own funds unless 20% down. Down payment can be derived from gift.* Gifts: Required down payment typically higher than 3.5%. 3.5% down payment requirement Down Payment: Conventional: FHA:
FHA Overview Conventional: FHA: Less likely to qualify for Conventional loan than FHA More likely to qualify for FHA loan than conventional loan Bankruptcies & Less-Than-Perfect Credit: Typically more stringent guidelines. Typically more flexible guidelines Guideline flexibility:
Any repair or improvement requiring a work schedule longer than 6 months or more than 2 payments per specialized contractor
FHA 203(k) Streamline Application Process Realtor helps borrower locate property. Borrower* and realtor determine improvements based on need or preference. Borrower* obtains contractor bids and cost estimates as soon as possible. *or Cost Consultant hired by borrower
FHA 203(k) Streamline Application Process Appraiser determines “as-is” and “improved” values. Loan closes. Initial draw may be disbursed, @ 50% of contract amount. Loan is underwritten and approved.
FHA 203(k) Streamline Application Process Construction MUST begin AS SOON AS POSSIBLE AFTER closing, but no later than 30 days from closing Work is completed; final inspection by appraiser; final draw disbursed. MUST BE COMPLETED WITHIN 6 MONTHS OF CLOSING