Our FHA Direct and FNMA Direct programs offer 30-year fixed financing to borrowers with a credit score as low as 620, or even a 600 credit score in certain circumstances , and offers less restrictive guidelines than other similar programs. Even with our industry guidelines constantly changing, this is a great opportunity for us to continue to provide exclusive services to our clients. We are offering these two programs so that we can assist those buyers who may otherwise be stuck on the sidelines, unable to qualify for financing. There are certain requirements and circumstances that have to be met in order to qualify and obtain this financing.
With this unique program we have the ability to sell directly to the Federal Housing Administration, so borrowers with sometimes less than perfect credit and less money to put down may still qualify, and that loan is funded and protected by the FHA. With the FHA insuring the loans, we can offer great lending programs and qualify more borrowers. The FHA Direct program requirements include:
• As little as 5% down that must come from the borrower’s own funds
• A debt-to-income ratio, known as DTI, up to 41%. DTI is the percentage of a consumer’s monthly gross income that goes towards paying debts
• No late payments – that means no late mortgage payments in the past 12 months and no late payments on any other tradelines (such as credit cards, car loans, etc.) in the past 6 months
• No prior collections, except medical
• Six months reserves, though these funds can be a gift. Reserves are available funds you could use to pay your mortgage should you lose your job or run into financial hardship
• Thirty days straight employment history – there is no additional waiting period for borrower’s with employment gaps of 6 months or more
• The subject property must be owner occupied—additionally the borrower cannot own any other properties.
• The borrower’s credit score may go down to 600 with strong compensating factors such as a larger down payment, higher reserves, etc.
FNMA Direct is similar to FHA Direct, though we are selling directly to Fannie Mae. When you take out a loan to buy a home, it often transfers to another financial institution after closing. This process is a transfer from the primary to the secondary market. Secondary market investors such as Fannie Mae are an important part of the mortgage market, as they provide an opportunity for lenders to replenish their cash reserves and continue offering mortgages to homebuyers. Selling directly to Fannie Mae opens the door for even more opportunities for our borrowers.
FNMA Direct financing includes:
• Credit as low as 620
• As little as 3% down
• Debt-to-Income Ratio up to 50%
• No Deposit sourcing for immaterial deposits —smaller deposits in your account won’t need a letter of explanation, etc.
• Bonuses and Commissions can be annualized with prior year W2—no requirements to wait for the current year’s tax return or documents to support the current year’s salary with use of last year’s W2
• Self-employed Income can annualized with prior year 1040— no requirements to wait for the current year’s tax return or documents to support the current year’s salary with use of last year’s 1040
• Own up to 10 properties and we can finance up to four of them
We are constantly trying to stay ahead of the curve and find new ways for our clients to obtain mortgage financing at a time where it has become difficult out there for some people to qualify. These programs set us apart from other lenders and provide our clients a financing opportunity that they may not find elsewhere.