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If the government has a game plan, it would be to push more buyers towards FHA financing.  Beginning next year, the FHA will be collecting at least 1.75% on every loan (up from 1.50%).  It’s their self-insurance, and hopefully the extra bump in 2009 will be enough.  They also add a monthly MI (see below)

But they haven’t tightened up much – here are FHA benefits:

• No minimum credit scores required (a history of cell-phone-bill payments will work)
• Down payment to be 3.5% in 2009 (up from 3%).
• Buyer’s entire cash needed can be gifted from family, employer, etc. (but no more DAP)
• Sellers can pay up to 6% towards closing costs and repairs
• No reserves required
• No cap on debt ratios – compensating factors considered (55% is about as high as they go)
• No impact from declining-market conditions
• Loans are assumable
• Not limited to first-time homebuyers
• Sellers are no longer required to make most repairs (before they had to repair anything the appraiser found unacceptable)

The FHA loan amount has been $697,000, but it is expected to match Fannie/Freddie’s new San Diego amount, $546,250.  Here’s a sample qualification:

$565,000   sales price

$  19,775   down payment

$545,225   loan amount at 6%

$3,268.90  P & I

$   565.00  Prop. Tax

$     75.00  Fire Ins.

$   249.89  Mortgage Insurance

$4,158.75  Total Housing Cost

$    600.00  Car Payments (guess)

$4,758.75    Total debt (divide by 55%) = $103,824 annual gross income to qualify

You can keep adding non-occupying related people until you qualify.  As long as your parents aren’t maxed out on credit cards, they can co-sign and their income and expenses are added to the qualification, even though they won’t be living there. 

VA

It used to be that VA loans were 100% LTV up to $417,000, and 25% of everything higher than that.

But now VA is financing 100%, up to $729,000!

There is also plans to raise the max loan amount to $1,050,000 with no down payment.

Posted on Thursday, November 20th, 2008 at 9:17 PM in Mortgage Qualifying | 4 Comments » |  Print You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.