The document summarizes FHA and VA loan programs that can help buyers with lower credit scores or who have faced prior bankruptcies or foreclosures. Key points include: - FHA allows lower down payments of 3.5%, higher debt ratios, prior bankruptcies only 2 years old, and gift funds can cover down payment and closing costs. Maximum loan amount is $697,500. - VA offers zero down payment, prior bankruptcies allowed after 2 years, and gift funds can cover closing costs. Maximum loan amount is $417,000 with no down payment required. - Both programs accept alternative credit documentation for buyers with credit scores below 620 and allow prior fore

1. “ The Come Back Kids – VA and FHA” Presented by: David Johnston San Diego Funding [email_address] 619-977-6497

2. Program Emphasis *Higher Debt Ratios * Low/No down payment * 100% Gift money OK *BKs only 2 yrs old (FHA/VA) *Seller paid closing costs *Declining Markets OK *Manufactured Housing *Not a “magic wand”

3. FHA Basics * Don’t have to be 1 st Time Buyer * 3.5% Down Payment *Need Condo approval – no PUD approval *Cannot do ‘spot’ approvals on condos-*Seller can pay all closing costs - not to exceed 6% of sales price *BKs only 2 years old *High debt ratios– FNMA does not apply *$697,500 max loan amount (see chart) *Can do Units! May require larger down payment + reserves *Owner Occupied Only * No FICO scores OK with alternative credit– 620 FICO *Cash out refi 95% to $417,000, 85% above *203K Streamline – The Renovation Loan * NO mandatory seller’s fees (except $60) * Termite clearance IS NOT mandatory

4. FHA Loan Programs FHA Mortgage Programs (02/20/09) Introduction This section outlines the FHA Mortgage Programs which are eligible for submission to the Chase Correspondent Division. Section 203(b),203K, 234C Section 203(b) is the standard FHA program. Refer to the following table for applicable loan parameters: Loan Purpose Purchase Refinance Term 30 15 Property Type 1-4 PUD, Condo New or existing Temporary Buydown • 2-1 or 1-1 • Borrower must qualify at Note rate

5. FHA BK and Foreclosure If foreclosure due to hardship, then. • If seasoned >36 months but < 84 months minimum, max LTV is 90%. • If seasoned > = 84 months standard down payment policies apply • If foreclosure due to financial mismanagement, must be seasoned at least 84 months Re-established credit

6. FHA Bankruptcy Chapter 7: • Two years from discharge date; evidence the borrowers have demonstrated ability to responsibly manage their financial affairs; and that the borrowers have reestablished acceptable credit (or chosen not to incur new credit). • Between one and two years from discharge date; must provide evidence that the cause of bankruptcy was caused by an extenuating circumstance beyond the borrower’s control, the borrowers have demonstrated the ability to responsibly manage their financial affairs, and the borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur. • Less than one year from discharge date - not eligible. • Chapter 13: • Satisfactory performance for at least one year of pay out period and permission from court to enter into the mortgage transaction.

7. FHA 203K Streamline Features

8. FHA Basics * Non Occupant co-borrowers are allowed on FHA loans 100% debt ratio for primary Combine all income and debt * MIP and MMI– 1% MIP .90 MMI OTMIP can be financed and MMI drops off at 78% LTV * Rate and Term Refis to 96.5% LTV-- appraisal * High Balance FHA 2 nd appraisal -over $417,000 -LTV =/> 95% -SD/Riverside/SB Counties * Be aware of FHA’s “Flipping” rule

9. FHA Example

10. FHA S.D. Loan Limits

11. FHA Riverside Loan Limits

13. FHA Condo List

14. FHA Link https://entp.hud.gov/idapp/html/condlook.cfm Call me and I will forward the link– 619-977-6497 [email_address]

15. VA Basics * Zero Down payment *$ 417,000 max loan amount * High Balance VA to $437,500 – partial down payment required above $437,500 *100% gift/ loan OK for closing costs *Seller can pay all closing costs -VA No No max 4% of sales price * Seller can pay off buyer’s debts * No FICO minimum – alternative credit OK– 620 FICO *BK 13 – 1 year and Court approval *Veteran can re-use eligibility *VAFF – waived with perm disability *Seller Mandatory Costs *Must have termite clearance

16. VA Programs Purchase • A VA purchase transaction secures the acquisition of a residence. • Only purchases qualify for temporary buy-downs. • Borrower must qualify at Note rate. Terms 30 and 15 year Property 1-4 Condo and PUD New and existing Owner occupied only Condos Must appear on VA approved list

17. VA Bankruptcy Bankruptcy (10/19/10) • Chapter 7: • At least two years from discharge date; bankruptcy may be disregarded. Reason must be documented and not likely to reoccur. • Between one and two years from discharge date; credit has been reestablished for that period of time and was caused by circumstances beyond the borrower’s control and evidence the borrowers have demonstrated their ability to handle their financial affairs. • Less than one year - not eligible. • Chapter 13: • Satisfactory performance for at least one year of pay out period and permission from court to enter into the mortgage transaction.

18. VA Foreclosure Foreclosure/Deed-In-Lieu (10/19/10) • If loan was a prior VA loan, determine if any amount of entitlement was forfeited and whether remaining entitlement is sufficient to support the transaction. • Apply the same requirements as a Chapter 7 bankruptcy.

19. VA Payments

20. VA Condo Condo PUD

21. Search by City and State

22. VA Link http://condopudbuilder.vba.va.gov/2.2/frames.html Call me and I will forward the link.

23. Double Check Legal

24. Thank You! David Johnston 619-977-6497 [email_address]