Update On Mortgage Rules

We keep hearing today that it is hard to get a mortgage.  Well, yes, I guess it is.  But it was "easy money" that got a lot of people into financial troubles with real estate a few years ago, so maybe some tightening of mortgage rules and regs was in order.

John Fenech of Sunbelt Lending Services has sent me today's "Basic Mortgage Guidelines"; it's kind of an update on what you can expect if you are looking to get a mortgage in today's market. 

Conventional Mortgage

• Maximum financing on a primary residence is 97%, but 95% is more sensible because the mortgage insurance premium is very high on 97% loans.
• Maximum financing for second homes is 90%.
• Maximum financing for investment property is 75%.
• Maximum financing on an owner-occupied condo is 75%; if it is going to be a second home, the max financing is 70%.
• Condos will not be approved for a mortgage if there is pending litigation against the condo association.
• The maximum mortgage amount is $417,000.  If a larger mortgage is required, it is called a "Jumbo Loan" and requires a 20% down payment and a higher credit score.
• The minimum credit score needed to qualify is 620; you need 740 to qualify for the best mortgage rates.
• Investment condo financing is not readily available.

FHA Financing

• Down payment requirement is 3.5%.
• Must be a primary residence.
• Maximum loan amount is $292,500.
• Minimum credit score is 640, however can go down to 620 by exception.
• Down payment can be a gift from a family member or grant from employer.
• Maximum seller contribution toward closing costs and prepaid items is 6%.
• Condos must be on the FHA approved list.

VA Financing

• You must be an eligible veteran.
• Property must be your primary residence.
• Maximum loan amount is $417,000.
• Maximum financing is 100% -- $0 down payment!
• Minimum credit score is 640.
• Seller can contribute up to 4% of closing costs and prepaid items.
• Condos must be on the VA approved list.

If you need to know if the condo is approved, here's where you should look ...
https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch
or
https://entp.hud.gov/idapp/html/condlook.cfm

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