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Conventional Vs. FHA Financing

February 17th, 2013 5:17 PM by Sam Kader

 

Recent HUD announcement to increase its annual mortgage insurance and mortgage insurance for the life of the loan makes the decisions to go conventional a bit easier (if one can qualify). Here are some pointers for conventional with Private Mortgage Insurance (PMI):

  • 700 FICO score, 3% down, 45% maximum Debt-To-Income (DTI) on Owner Occupied (OO), Single Family residence (SFR).
  • 660 FICO score, 5% down, 45% max DTI on OO, SFR/Warrantable Condo.  
  • 700 FICO score, 10% down, 45% DTI on second home (must be located in resort/vacation area).
  • Collections may be required to pay.
  • Bankcruptcy requires 4 years since the date of discharged.
  • Adjustable Rate Mortgage (ARM) - DTI is capped at 41%.
  • Manually underwritten files - 10% down is required.
  • Full appraisal is mandatory.
  • 3 - 4 unit properties are ineligible.
  • Interest Only (IO) loans are ineligible.
  • Homeowners with prior claims are ineligible.

3% gift funds is allowed provided that:

  • Max DTI is 41%
  • 740 FICO score is required.
  • Fixed-rate loans only.
  • SFR only.
  • OO only.
  • No subordinate financing allowed.

Please be advised that the files will require closer scrutiny from the lender as well as the mortgage insurance company. Pacific Coast Financial will pre-underwrite the files internally to ensure that our files will be approved.  Each borrower is unique. Please call or email us for free consultation.


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