Great Information from One of My Preferred Lenders

Fellow Agents - this is some information from one of my preferred lenders.  Diane always sends out great information and is a great educator and resource.  I would highly recommend her.

I get lots of questions about the government programs so wanted to clear up some of the misconceptions:

FHA

1.       FHA no longer requires a termite inspection automatically on new loans. Only required if the appraiser sees anything that concerns him

2.       Sellers are not required to pay any “non-allowables for borrowers- buyer can pay all lender and title closing costs

3.       The appraisers that do FHA appraisals are the same ones that do conventional appraisals so value should always be the same as if conventional loan- the only difference between a conventional and FHA appraisal is the appraiser must address the condition of the property and can make the value “subject to” repairs to bring property in line with requirements. Main issues we see are wood rot, standing water, holes in wall or water stains not repaired. Appraiser is verifying home seems to be “safe, sanitary, and habitable”.

4.       All buyers funds can come from a gift from family member

5.       Seller contribution can be up to 6% of sales price- as long as buyer meets 3.5% down payment amount

VA

1.       Clear termite inspection with no conducive conditions must be provided

2.       If property has well and/ or septic, then inspections must be done and any repairs called for made prior to closing

3.       Seller may be required to pay “non-allowable” fees for buyer—but it is a little complicated. Buyer is allowed to pay up to 1% of the loan amount towards closing costs for lender and title. Usually these fees run about $1800. As long as the lender is not charging an origination fee, and loan amount is over $180000, then buyer should be able to pay his own costs. If loan amount is under $180000, then the costs will exceed 1% and seller will need to assist.

4.       VA appraisals are done through VA. They may also be “subject to” repairs if appraiser feels property is not comparable to other homes in are or has issues that affect “safety and habitability” of property.

5.       All buyer’s funds can come from a gift from family member

6.       Seller can contribute up to 4% of sales price to  buyer’s closing costs

USDA

1.       This is a rural program through USDA- zero down payment and no mortgage insurance ( there is a monthly fee to USDA). Only available in certain geographical areas- not available in Harris County

2.       Seller can contribute up to 6% of sales price to buyer’s closing costs

3.       Gift funds from family member allowed

4.       This is a conventional loan, but the appraisal is done per FHA standards

5.       Borrowers must be under the household income limit to qualify

Hope this helps- you can always give me a call when you have specific questions!