Weekly Rate Update <<EG, do we have a link where they can see the weekly updates and/or subscribe to them?>>
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Basic Links
- The mortgage loan process
- Have buyers opt out of credit solicitations
- Borrower’s FAQs for mortgages
- Generic document checklist
- Mortgage payment calculator
Other Home Loan Programs (not mentioned below)
- All-In-One interest only line of credit,
- Halal Home Loan – for Islamic buyers
- Home Fund It – for crowd sourcing a down payment
- Hard Money Loans (for investment purchases)
- Self Employed Bank Statement Programs
- DSCR Program – debt service cover ratio program for investors
- Physician Program / Professional Program
Other Cool Links
- Lock-n-Shop – buyers can lock before finding a property
- List and Lock – a seller can lock a below-market interest rate for a potential buyer (<– this is really cool)
- Extended Rate Locks -up to 12 months
- 2/1 Temporary Buy Downs – and other buy downs (like a 3/2/1)
- Bridge Loans Explained
- Adjustable Rate Mortgages (ARMs) Explained
- Assumable Loans – how to
- Forward Commitments – for builders, not money due until after closing
Conforming Home Loans
Conventional mortgages are non-government home loans. Conforming home loans are loans that meet Fannie Mae and Freddie Mac’s guidelines. Below are helpful highlights about these mortgage programs.
Occupancy Allowed
- Owner Occupied / Primary Home
- Second Homes / Vacation Homes
- Investment Properties / Non-Owner Occupied
Down Payment
- Primary Home / Owner Occupied
- 3% minimum down payment (see out recommendations for down payment amounts)
- Note: Zero down is possible with a Bond or Down Payment Assistance Program
- Check out our Home Fund It program that helps with down payments
- Second Home / Vacation Homes
- 10% minimum down
- NOTE: do 20% down if possible to avoid higher rate and MI factors
- Investment Properties / Non-Owner Occupied
- 15% minimum down
- NOTE: do 20% (or even 25%) if possible to avoid higher rate and MI factors
Max Loan Amount
- $726,200 in Texas (see conforming loan limits for other areas)
- Note: Loans that are $726,201, and above, are considered jumbo loans
- Note: Second liens can be used to avoid jumbo financing
Mortgage Insurance
- PMI required if putting less than 20% down
- Check out our mortgage insurance overview page for various types of MI and other programs “without” PMI
- MI can be cancelled
Interest Rates
- Rates change daily. We often reference www.MortgageNewsDaily.com for a quick check on rates.
- Rates are impacted by down payment, credit, etc.
- Check out our Loan-Level-Price-Adjustment (LLPA) page for a better explanation
- Note: the interest rate can be different if they choose to add-on the Texas Veteran Land Board feature.
Points
- Discount points to buydown the rate are optional.
- Note: since COVID the market is often priced where points may need to be charged to get a rate.
- Note: since COVID, most second home and investment property loans will require points.
Closing Fees
- See our closing cost overview page for a breakdown of costs.
- There aren’t any mandatory “program fees” nor required up-front MIP like is with government-backed loans (like FHA, VA, and USDA).
Escrows
- Required when putting less than 20% down.
- Option when putting 20% down or more.
- Check out our escrow accounts overview page as well as our new construction escrow accounts explained because those can be tricky.
Seller Concessions
- Check out our seller concessions page for more details.
- Primary Homes
- 3% max concessions if less than 10% down
- 6% max concessions if the down payment is between 10% and 24.99%
- 9% max concessions if putting down 25% or more
- Second Homes
- Same as primary homes (see above)
- Investment Property
- 2% max seller concessions
Gift Funds
- Check out our gift funds page for best practices and more details.
- There’s no limit the amount of the gift funds, and no minimum amount required from the borrower for a 1-unit property.
- Note: for 2-4 unit properties, at least 5% of the funds at closing must come from the borrower.
- Gift funds must be documented (and seasoned) from the donor’s account. Meaning, the donor will need to provide a bank statement.
- Check out our Home Fund It program to simplify gifting.
Appraisals
- Lender uses an Appraisal Management Company (AMC) for orders
- Many lenders (like us) are able to select the panel of appraisers used in the rotation by the AMC
Debt-to-Income Ratios (DTI)
- Fannie Mae and Freddie Mac’s automated underwriting systems (AUS) determine what debt-to-income ratio (DTI) is allowed.
- More often than not, most approvals come with a DTI below 45%. There are some rare cases where the approval will be granted with a 49.99%. And in very, very rare cases (like almost never), we’ve seen approval with a 59.99% DTI.
Underwriting
- Fannie Mae and Freddie Mac use their own proprietary automated underwriting systems (AUS) to determine approval.
- In other words, manual underwriting is not allowed. (Meaning, an Underwriter can’t override the system’s findings).
- Note: Fannie Mae’s AUS is called Desktop Underwriter (DU). Freddie Mac’s AUS is called Loan Prospector (LP).
Credit (Minimum Scores)
- Supposedly 620 but technically it’s whatever Fannie and Freddie’s automated underwriting systems allow.
- We’ve seen lower scores (like 620) get approved, but there were significant compensating factors (like big down payment, lots of assets, etc.)
- Note: due to Fannie and Freddie’s Loan-Level-Pricing-Adjustments with lower credit scores, often times FHA may make more financial sense with lower credit scores.
- Check out our credit score overview page for how scores work as well as some tips and tricks to improving scores.
- Note: for non-purchasing spouses (i.e. spouses not on the loan), their credit does NOT need to be pulled, nor do their debts need to be counted in the loan.
Chapter 7 (or 11) Bankruptcy
- 4-year waiting period from the discharge or dismissal date
- 5-year waiting period if there are multiple BK’s in the last 7 years
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Chapter 13
- 2-year waiting period from the discharge date
- 4-year waiting period from the dismissal date
- 5-year waiting period if there are multiple bankruptcies in the last 7 years
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Foreclosure
- 7 years when title transfers from borrower’s name (for Fannie Mae)
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Short Sales / Deed in Lieu
- 4 years when title transfers from borrower’s name (for Fannie Mae)
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Repairs, Rehab, and Remodeling
- Many lenders will allow escrow holdbacks up to $5,000 (and maybe $10,000) for small repairs.
Miscellaneous
- Can be used with the Texas Veteran Land Board feature.
- Manufactured homes, both single and double wide, are allowed. The interest rate will be higher than a typical detached single family.
- Condos and townhome are also allowed, but the interest rate will be higher than a detached single family.
FHA Home Loans
FHA mortgages are government home loans. The “normal” FHA mortgage is called a “203b”. This is only worth noting to avoid confusion since there are other FHA programs (like the 203k renovation home loan).
Occupancy Allowed
- Owner Occupied / Primary Homes only.
- No second homes or investment properties.
- Note: FHA does allow for a non-occupying co-borrower(s). Meaning, someone can cosign with the borrower and not occupy the home.
Down Payment
- 3.5% minimum down payment.
- Zero down is possible with a Bond or Down Payment Assistance Program.
- Check out our Home Fund It program that helps with down payments.
Max Loan Amount
- The maximum base loan amount is $531,300 for north Texas counties (like Dallas, Collin, Tarrant, Parker, Wise, etc.).
- FHA loan limits vary by county. Here’s the link to look up FHA loan limits by county.
Mortgage Insurance
- FHA mandates both an upfront PMI as well as a monthly PMI, regardless of the down payment amount.
- The monthly PMI is for the life of the loan when the down payment is less than 10%.
- See the FHA home loan page for more details on FHA’s Private Mortgage Insurance.
Interest Rates
- Rates change daily. We often reference www.MortgageNewsDaily.com for a quick check on rates.
- FHA rates are often lower than conventional rates.
- The interest rates also don’t have as many adjustment for lower credit scores like conventional loans. Typically, the adjustment is made for scores below 660, 620, and 600.
- Note: the interest rate can be different if they choose to add-on the Texas Veteran Land Board feature.
Points
- Discount points to buydown the rate are optional.
- Note: since COVID the market is often priced where points may need to be charged to get a rate.
- Note: since COVID, most second home and investment property loans will require points.
Closing Fees
- See our closing cost overview page for a breakdown of costs.
- There aren’t any mandatory “program fees” nor required up-front MIP like is with government-backed loans (like FHA, VA, and USDA).
Escrows
- Required when putting less than 20% down.
- Option when putting 20% down or more.
- Check out our escrow accounts overview page as well as our new construction escrow accounts explained because those can be tricky.
Seller Concessions
- Check out our seller concessions page for more details.
- Primary Homes
- 3% max concessions if less than 10% down
- 6% max concessions if the down payment is between 10% and 24.99%
- 9% max concessions if putting down 25% or more
- Second Homes
- Same as primary homes (see above)
- Investment Property
- 2% max seller concessions
Gift Funds
- Check out our gift funds page for best practices and more details.
- There’s no limit the amount of the gift funds, and no minimum amount required from the borrower for a 1-unit property.
- Note: for 2-4 unit properties, at least 5% of the funds at closing must come from the borrower.
- Gift funds must be documented (and seasoned) from the donor’s account. Meaning, the donor will need to provide a bank statement.
- Check out our Home Fund It program to simplify gifting.
Appraisals
- Lender uses an Appraisal Management Company (AMC) for orders
- Many lenders (like us) are able to select the panel of appraisers used in the rotation by the AMC
Debt-to-Income Ratios (DTI)
- Fannie Mae and Freddie Mac’s automated underwriting systems (AUS) determine what debt-to-income ratio (DTI) is allowed.
- More often than not, most approvals come with a DTI below 45%. There are some rare cases where the approval will be granted with a 49.99%. And in very, very rare cases (like almost never), we’ve seen approval with a 59.99% DTI.
Underwriting
- Fannie Mae and Freddie Mac use their own proprietary automated underwriting systems (AUS) to determine approval.
- In other words, manual underwriting is not allowed. (Meaning, an Underwriter can’t override the system’s findings).
- Note: Fannie Mae’s AUS is called Desktop Underwriter (DU). Freddie Mac’s AUS is called Loan Prospector (LP).
Credit (Minimum Scores)
- Supposedly 620 but technically it’s whatever Fannie and Freddie’s automated underwriting systems allow.
- We’ve seen lower scores (like 620) get approved, but there were significant compensating factors (like big down payment, lots of assets, etc.)
- Note: due to Fannie and Freddie’s Loan-Level-Pricing-Adjustments with lower credit scores, often times FHA may make more financial sense with lower credit scores.
- Check out our credit score overview page for how scores work as well as some tips and tricks to improving scores.
- Note: for non-purchasing spouses (i.e. spouses not on the loan), their credit does NOT need to be pulled, nor do their debts need to be counted in the loan.
Chapter 7 (or 11) Bankruptcy
- 4-year waiting period from the discharge or dismissal date
- 5-year waiting period if there are multiple BK’s in the last 7 years
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Chapter 13
- 2-year waiting period from the discharge date
- 4-year waiting period from the dismissal date
- 5-year waiting period if there are multiple bankruptcies in the last 7 years
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Foreclosure
- 7 years when title transfers from borrower’s name (for Fannie Mae)
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Short Sales / Deed in Lieu
- 4 years when title transfers from borrower’s name (for Fannie Mae)
- Freddie technically doesn’t list a seasoning requirement but they typically follow Fannie. Freddie’s Automated Underwriting System must approve it.
- Check out our bankruptcy and foreclosure seasoning page for more details
Repairs, Rehab, and Remodeling
- Many lenders will allow escrow holdbacks up to $5,000 (and maybe $10,000) for small repairs.
- Note: for major improvements, Fannie Mae offers their Home Style Renovation Loan Program and Freddie Mae offers their Home Ready Renovation Loan Program.
Miscellaneous
- FHA typically only allows a borrower to have one FHA loan within the same metropolitan area. They don’t want FHA to be used as a financing vehicle for aspiring real estate investors.
- Can be used with the Texas Veteran Land Board feature.
- Manufactured homes, both single and double wide, are allowed. The interest rate will be higher than a typical detached single family.
- Condos and townhome are also allowed, but the interest rate will be higher than a detached single family.
We assist clients with all type of mortgage loan programs