Mortgage Loan Program Checklist

Mortgage Loan Program Checklist

Mortgage Loan Program Checklist: Great Resource

If there is a great resource for all of you prospective borrowers out there, this article could possibly be it as it is a Mortgage Loan Program Checklist.  Now this list isn’t going to go into every different loan that is available, but we will go into detail about some of the most popular loan programs that are offered to borrowers.  A lot of borrowers we run into don’t have a clue what type of loan they should be looking for, what the loan programs guidelines are, and which lender they should be going with.  We can get that last item out of the way right now and they should be going with Loan Consultants.

A little background on us is we strive to get a majority of our loans closed in 21 days, and offer loan programs without any lender overlays in order to get as many loans approved and closed as possible.  Under direct orders from upper management, customer service is always #1 and that pushes loan officers, loan processors, and mortgage underwriters to all work together and have a clear method of communication to get all documents and questions answered in a timely manner to ensure deals close on time.

 How To Get The Right Mortgage Program

With an abundance of loan programs out there and with us offering nearly every loan possible, the Mortgage Loan Program Checklist will take care of informing you about the most important and most popular loans offered.  Now if you are looking for a unique situation that may need a loan that is not listed below, please reach out to me ASAP at 888-900-1020 and we can work 1 on 1 to get you in the proper mortgage product.

Mortgage Loan Program Checklist: FHA Loan
Mortgage Loan Program Checklist: FHA Loan

The first loan up on the Mortgage Loan Program Checklist is the FHA Loan.  FHA Loans are by far the most popular loan choice for borrowers and it is for the fact that guidelines are lenient compared to other programs that are out there offered by Fannie Mae and Freddie Mac.

  1. Owner-occupied properties that are 1-4 units are a must as this cannot be used for a 2nd home or an investment property of any kind.
  2. Down Payment options as low as 3.5% contingent on the borrower’s FICO score.
  3. FICO score of 580+ will ensure a 3.5% down payment loan, while a FICO score less than 580 will result in a 10% down payment and other compensating factors.  Compensating Factors are additional items that show the borrower in a good light such as additional income, co-borrowers, etc.
  4. Debt-to-Income Ratio or DTI Ratio is also based on FICO score with a FICO score of 620+ allowing for a 56.9% backend DTI Ratio.  Now if you are a sub-620 borrower, you will only be allowed to have a 43% backend DTI ratio.  Your backend ratio is calculated by taking your proposed monthly mortgage payment plus any other monthly debt obligations and dividing that by your monthly gross income.
  5. Unpaid Collections are permitted under FHA Loans, but there are different rules for medical and non-medical collections.  Non-medical collections that exceed $2,000 are required to have 5% of the amount due factored into the monthly DTI ratio, however, medical collections are not required to have the 5% enforced in your monthly DTI ratio.
  6. There are mandatory waiting periods after derogatory events:
  7. Chapter 7 Bankruptcy: 2 years from discharge date
  8. Chapter 13 Bankruptcy: No Waiting Period but requires a manual underwrite
  9. Short Sale: 3 years from recorded date
  10. Foreclosure: 3 years from recorded date or sheriff’s sale
  11. Down payment funds are allowed to be 100% gifted as long as they are sourced
  12. FHA Loans have an Up-Front Mortgage Insurance Premium which is normally rolled into the loan at closing.  This rate takes 1.75% of the total loan amount.  Additionally, there is also a monthly Mortgage Insurance Premium which takes 0.085% of your loan amount and divides this into a monthly premium amount that is paid for the entirety of the FHA Loan.

Mortgage Loan Program Checklist: Conventional Loans
Mortgage Loan Program Checklist: Conventional Loans

Conventional Loans are those that abide by the guidelines set forth by Fannie Mae and Freddie Mac the 2 GSE’s or government sponsored enterprises.  Conventional Loans have some guidelines that are favorable to potential borrowers, but there are a lot of areas that require a more qualified borrower

  1. You are able to use Conventional Loans for 1-4 unit homes that can be a primary residence, investment property, or even a second home.
  2. Minimum FICO score required is a 620.  However, if you aren’t getting your loan done with us you may be required to have a minimum of 640 or even 660 to qualify for a loan given various lender overlays across the industry.
  3. Debt-to-Income Ratio for Fannie Mae products is 45% while Freddie Mac products are up to 50% backend ratio.
  4. Down payments can be as low as 3%, however, these are for first-time borrowers or buyers in certain circumstances.  The normal down payment requirement is 5%.
  5. If there are unpaid collection and/or charge off accounts, these will need to be paid before closing on the deal without exception.
  6. There are mandatory waiting periods after derogatory events:
  7. Chapter 7 Bankruptcy: 4 years from discharge date
  8. Chapter 13 Bankruptcy: 2 years from discharge date
  9. Short Sale / Deed-in-Lieu of Foreclosure: 4 years from recorded date
  10. Foreclosure: 7 years from recorded date or sheriff’s sale
  11. If you put less than 20% down payment, you will be required to pay PMI or private mortgage insurance.  Your monthly premium is calculated by how far from 80% LTV your loan is.  Someone that puts 5% down will have a higher monthly PMI than someone with a 15% down payment.

Mortgage Loan Program Checklist: VA Loans

VA Loans with their guidelines by the United States Department of Veteran’s Affairs have some of the most lenient guidelines of all loans available, but this loan is not offered to anybody.  You must be a veteran of the United States Military and have an honorable discharge and COE or Certificate of Eligibility.  As long as you are a veteran, this is by far the base loan program that is offered and here and we do our best to make sure these loans close in 21 days and have no lender overlays on them as well.  Our VA Loans compared to others in the industry will see that we lend to the minimum guidelines when possible, especially with our VA products.

  1. Owner occupied property is required for a VA Loan that must be a 1-4 units and investment properties and second homes are not permitted.
  2. There are no minimum FICO scores under VA Loan Guidelines, but most lending institutions do enforce some type of minimum FICO requirement.  We have recently done VA Loans with FICO scores as low as 580 when other lenders are hard pressed to do anything under 620.  This is how we separate ourselves from the competition with these attractive guidelines.
  3. There is also no formal debt-to-income ratio required for VA Loans and here we can do loans where the DTI ratio is over 60%!  This is unheard of in the industry.
  4. VA Loans are special because they do not require a down payment and can be for 100% financing offering a loan without any money out of pocket.
  5. VA Loans have historically had the lowest mortgage rates possible over the past 3 years which just shows how all veterans should try to get a VA Loan before any other loan out there.
  6. There are mandatory waiting periods after derogatory events:
  7. Chapter 7 Bankruptcy: 2 years from discharge date
  8. Chapter 13 Bankruptcy: No waiting period as long as 12 months of payments on the repayment plan have been made in a timely fashion
  9. Short Sale: 2 years from recorded date
  10. Foreclosure / Deed-in-Lieu of Foreclosure: 2 years from recorded date or sheriff’s sale
  11. You are also not required to pay off any outstanding medical or non-medical collection and charge-off accounts for VA approval.

Mortgage Loan Program Checklist: Conclusion

As you can see, there are many types of mortgage loan programs out there and I hope this 2017 Mortgage Loan Program Checklist is used an asset in your loan search.  As you can also see, we have some great loan programs out there for you and we can say that there are no lender overlays when you look to do business with us.  We go above and beyond for our borrowers by offering the most lenient guidelines possible along with 21 day closes.  There will be no delays when you work with us as we value all of our customers highly and want to do our best for you.  If you want to get started or if you have questions about loans that were not mentioned here such as: USDA Loans, FHA 203K Loans, Reverse Mortgages, Cash-Out Refinances, etc.  then you need to call today at 888-900-1020.  I look forward to working with you and making your dreams happen!  There is no reason we can’t get a loan done for you as we strive to close 100% of borrowers that receive a pre-approval from us.

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