Comparing FHA, Conventional & Non-QM
âą
0 gefĂ€llt mirâą311 views
An educational deck showing the key differences between FHA, Conventional and Non-QM programs
Empfohlen
Weitere Àhnliche Inhalte
Ăhnlich wie Comparing FHA, Conventional & Non-QM
Ăhnlich wie Comparing FHA, Conventional & Non-QM (20)
KĂŒrzlich hochgeladen
KĂŒrzlich hochgeladen (20)
Comparing FHA, Conventional & Non-QM
- 2. DownPayment FHA 3.5% Minimum ___________________________________ Conventional 5% Minimum 3% Minimum (HomeReady/Possible) ___________________________________ Non-QM 5% Minimum (Full-Doc) 10% Minimum (Alt Doc) ________________________________ 96.5% 3.5% 97.0% 3.0% 95.0% 5.0% 3.5% Generally accepted for all FHA loans ___________________________________ 3% Only available to first time home-buyers 5% option available to all others ___________________________________ Alt-Doc Qualify using bank statements, stated income, rental cash flow, etc. ________________________________ FHA
- 3. FHAMortgageInsurance Mortgage Insurance Required regardless of down payment ______________________________________ 1.75% Added to loan amount through Upfront MIP ______________________________________ 0.85% or 0.80% The MIP added to your mortgage depending on your down ______________________________________ After 11 Years Can cancel MIP if original down was 10% ______________________________________ $1,750 Of $100k loan can be paid upfront or added to loan ______________________________________ $850 or $800 Divided by 12 is the monthly MIP of a $100k loan ($70.83 or $66.70) ______________________________________
- 4. ConventionalMortgageInsurance 20% Minimum Down Payment to avoid PMI _______________________________________ 78% of Loan Balance Lender required to cancel when reached _______________________________________ Credit Score Greatly impacts PMI payment _______________________________________ HomeReady/Possible Have lower PMI rates _______________________________________ 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Highest Rate Middle Rate Lowest PMI No PMI PMI Payment Down Payment Cancel PMI Loan Balance
- 6. InterestRates FHA 3.94% National Average (December 2019) ______________________________________ Conventional 4.62% National Average (December 2019) ______________________________________ Non-QM Varies greatly between lenders ______________________________________ No Brainer? High MI costs that are non-cancelable ______________________________________ Above Average Credit scores get you below average rates ______________________________________ 1-2% Above Some non-QM lenders offer rates only slightly higher than the market ______________________________________
- 7. MinimumCreditScore FHA 580 Middle Score 500 if 10% Down Payment ____________________________________ Conventional 620 Middle Score ____________________________________ Non-QM 500 Middle Score ____________________________________ Multiple Borrowers Lowest middle score out of all applicants is used. FHA
- 8. Debt-To-IncomeRatios What Are DTI Ratios? The ratios used to determine if a borrower qualifies based on income. ___________________________________ Front Ratio The housing ratio is your monthly income divided by your mortgage as % ___________________________________ Back Ratio The DTI is your front PLUS monthly debt from your credit report 37.5%/50.0% good for FHA $1,500 Mortgage Against a $4,000 monthly income is a 37.5% front ratio ______________________________________ $500 Monthly Debt Would make your DTI 50% from example above.
- 9. CompensatingFactors Down Payment Larger than minimum down payment per program ___________________________________ Credit Score Credit score is considered every 20 points (620-640-660âŠ) ___________________________________ Cash Reserves After closing costs and down payment are accounted for
- 10. MaxDTIRatios FHA 45%/55% Max Ratios (Housing/DTI) ______________________________________ Conventional 43%/43% Max Ratios 43%/50% With Compensating Factors ______________________________________ Non-QM 40%/50% but varies between lenders ______________________________________ Likely To reach 45/55 even with 580 credit score ______________________________________ Not Likely To reach 43/43 without strong compensating factors ______________________________________ Programs Select investor programs offer no restrictions ______________________________________ FHA
- 11. MaxLoanAmount FHA $331,760 Floor Limit $765,600 Ceiling Limit ______________________________________ Conventional $510,400 Floor Limit $765,600 Ceiling Limit ______________________________________ Non-QM No Set Loan Limit ______________________________________ Floor Limit Loan limit in MOST areas ______________________________________ Ceiling Limit Loan Limit in areas deemed âhigh costâ FHA
- 12. Guidelines FHA Stricter Guidelines ______________________________________ Conventional Slightly Less Strict Guidelines ______________________________________ Non-QM Open Guidelines; Fewer Restrictions ______________________________________ FHA FHA âą Utilities must be tested during appraisal âą Deposits above 1% of purchase price must be sourced and explained ______________________________________ Conventional âą Utilities NOT tested during appraisal âą Deposits above 50% of qualifying income must be sourced and explained ______________________________________ Non-QM âą No property restriction âą Deposit rule is same as Conventional ______________________________________
- 13. FHABankruptcy Chapter 7/11 2-year waiting period __________________________________ Chapter 13 1-year from beginning payout period __________________________________ Multiple bankruptcy Not allowed __________________________________ Foreclosure 3-year waiting period
- 14. ConventionalBankruptcy Chapter 7/11 4-year waiting period __________________________________ Chapter 13 2-years from discharge and 4-years from dismissal __________________________________ Multiple bankruptcy 5-years from most recent discharge or dismissal __________________________________ Foreclosure 7-years standalone or 4-years if part of bankruptcy
- 16. FinalThoughts Any loan can be challenging/a breeze ____________________________________________ Sellers are more inclined to accept conventional offers ____________________________________________ Improve your credit score to position yourself for the best Hope you learned something new!