I posted a blog about using the $8,000 tax credit for the down payment on an FHA loan. This is true, here is what they say: In HUD's Mortgagee Letter 2009-15 press release, it basically says that a short term bridge loan or a second lien must be used to advance the funds to the home buyer and only approved entities can offer these secondary bridge loans. They are: • Federal Agencies •State Agencies •Government Agencies •FHA Approved Non-Profits •FHA Approved Lenders Here are a few other highlights from HUD's recent Mortgagee Letter 2009-15. •Borrower cannot get any cash back - if they need $7,000, they can only get $7,000. • Government agencies and non-profits can do second liens against the house for the down payment. •The payments on that second lien need to be counted into qualifying DTI ratios. •FHA approved mortgagees can do a "bridge loan" against the tax credit. •If payments on the tax credit are deferred, the deferment must be for a minimum of 36 months in order for the payment to not be included in the qualifying ratios.
They are, however still demanding that the borrower come up with 3.5% of loan towards the d.p., which, in the past, has been waived and may be waived again, depending on what Congress decides but, for now the 3.5% is still in effect. Here are the three government loans now available; determine for yourself which you, or your client, would be best served by: FHA Mortgage Seller Contributions – The seller can contribute up to 6% of sales price towards buyers closing and prepaid cost. Lender Premium Pricing – lender and seller total can equal 6% of sales price. Loans Against Borrower Assets – A borrower may actually borrow all funds needed for down payment, closing, and pre-paid costs provided they are borrowed against an asset of the borrower such as 401K, stock or bond accounts, other real estate, etc. Gifts – Gifts for funds needed for down payment, closing, and pre-paid costs may be obtained from a relative or someone with a clearly defined relationship. FHA allows “all” of the borrower’s down payment, closing, and pre-paid costs to be from a gift. Wedding Registry – FHA allows a borrower to set up an account at a bank or credit union to receive cash wedding gifts to be used towards the purchase of their home.
VA Mortgage (Veteran’s closing costs are limited by government regulation.) Seller Contributions – All closing and pre-paid costs may be paid by the seller. The veteran with no down payment may virtually move in with no expense. Consult your realtor when you consider asking for seller contributions. Lender Premium Pricing – Same as FHA mortgage
Loans Against Borrower Assets – Same as FHA mortgage Gifts – Same as FHA mortgage
• USDA Loans. USDA loans require NO money down. • There is NO monthly mortgage insurance • There is NO maximum loan amount • You do NOT need assets to qualify • You can qualify for a USDA loan w/ a 580 credit score (you WILL get a higher interest rate) • Mortgages are 30-year fixed at market rates • USDA Loans are for new & existing properties • You may qualify for a USDA loan if you are 1 day removed from a chapter 7 Bankruptcy as long as no foreclosures occurred in connection with it. To qualify for a USDA loan the property has to be considered rural. All of Hernando County is considered rural.
Peace,
