Low Down Payment Mortgages

Low Equity Mortgages

Borrower Qualifications

First, Every Borrower/Property Must Meet These Requirements

What we can tell you is that there are minimum criteria that must be met by every borrower/property:

  1. Primary residence only.
  2. Duplex, Single Family, Condo, and PUD only.
  3. Minimum FICO (credit) score of 660.
  4. Income and assets must be documented using documents like pay stubs, Forms W-2, income tax returns and bank statements.
  5. Property in decent condition. No fixer-uppers.
  6. Purchase price no more than 110% of the conforming loan limit for your area. The limit is roughly around $417,000, so right now these programs can be used for home values up to about $450,000. However, a significant increase in the limit was recently legislated. Those limits should be in place for these HFA/GSO programs by June, 2008.

Next Determine Eligibility

To determine if a property/borrower combination is eligible for the programs, use our our ELIGIBILITY QUESTIONNAIRE.

These are standard Fannie/Freddie firsts paired with HFA/GSO seconds. The seconds provide down payment assistance, help with closing costs and better terms for both the first and the second. These benefits are financed by government programs.

Of course, benefits from any government program must be distributed according to rules. In this case, the rules sometimes place a limitation on borrowers' income.

  1. Since borrowers' incomes must not exceed 140% of the area median income, then eligibility must be determined by providing a property address.
  2. For about half of the property locations we have tested, income must not be more than 140% to 160% of the area median. The "area" is determined by the property address of the prospective property.
  3. For the other half of our sample, the government programs place no limit on borrower income.

When submitting information to determine eligibility, borrowers need not have a specific property in mind. Pick a property in a preferred subdivision that's for sale. Interested in a different area, too? Pick a representative for sale property there, and submit a different eligibility request.

Then Submit the Application

We get back with an answer to every Eligibility Questionnaire submission within a business day. If the borrower/property combination is eligible, we outline the available programs and what they'll cost.

At that point a full application can be taken. After we submit the application information -- without the documents eventually needed to submit a complete application -- we provide a conditional approval within two working days. The conditional approval is dependable -- when all conditions are met with the specified documents, closing happens within three business days.

The ENORMOUS ADVANTAGE AND SPEED OF THIS METHOD

The rules for both eligibility and loan approval are complex because a number of programs are available. The rules are so complex that sophisticated rules-based software is used for both eligibility determination as well as assessing the application itself. Because these problems have been solved by sophisticated software, most of the time closing these complex programs is faster and simpler than other programs.

© 2006 LoanWindow.net