The Home Buyer's Korner

Information presented should be used for educational purposes only.

January 28th, 2015

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GREATER CITRUS HEIGHTS CALIFORNIA

The Home Buyer’s Korner

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FNMA’s Minimum Three Percent Down Payment Program

Three PercentFannie Mae’s My Community Mortgage Program was designed for first time home buyers who only have three percent of the sale price for a down payment, which can be gifted and you should have a minimum FICO score 660. Lower FICO scores may be allowable, but you’ll need to discuss lower scores with your lender and any additional lender overlays that might be included.  

The My Community Loan Program allows home buyers to qualify for a mortgage at conforming interest rates and lower PMI premiums, which could make it more attractive than other programs like FHA’s 3.5 percent down payment program. 

Unlike the FHA the My Community Mortgage Programs requires at least one home buyer to attend an approved First Time Home Buyer Course. 

The program also has special features for Public Safety Workers and Teachers. The concept behind the program is that for a community to be strong, it needs certain fundamental resources and assets within its infrastructure. Those include experts who provide specialized essential services like health care workers, law enforcement officers, firefighters, and schoolteachers.

To create a vibrant, safe, and healthy town or city, you need to attract and retain people who play those key roles. So Fannie Mae wants to make it easier for those folks to buy a home. By doing so, Fannie Mae’s My Community Mortgage initiative helps to ensure the stability and well-being of the entire community.

Fannie Mae lenders can provide you with a full list of the eligibility criteria for various vocations, but the program basically includes teachers employed by state recognized schools, members of state and local law enforcement agencies and fire departments, EMS responders and members of the military.

While medical doctors are not eligible, many other health professionals are, including pharmacy technicians, pharmacists, nurses, and medical technologists. Loan applicants can earn up to 100 percent [115 percent if you have a disabled family member] of the median income for your area and have as high as a 45 percent debt-to-income ratio with less-than-stellar credit. However, for homes located in neighborhoods designated as “underserved,” there is no income limit.

Perks available include discounted interest rates, down payments as low as three percent and as much as six percent in seller credits that can be applied to closing costs and pre-paid taxes and insurance. You can choose between a fixed-rate and an adjustable-rate mortgage and some home buyers can even qualify for 40-year fixed-rate amortization.

The program has many similarities to the governments FHA program. Fannie Mae allows for a flexible source of down payment and down payment assistance. It can be the home buyer’s cash on hand, but I strongly recommend you be able to document the source, gift from a relative or even from the employer are acceptable.

In addition to relaxed down payment requirement the My Community Mortgage Program also allows the use of over-time & part-time income to qualify for the loan for the professionals listed earlier in this post.  While most loans programs require two years of these incomes, this program will consider your part-time income if you can document it for 12 consecutive months.

It’s also worth noting that the My Community Mortgage Program is eligible on Condominium, Townhomes and Manufactured Homes on a permanent foundation the meets Fannie Mae’s minimum property standards.

First time home buyers wishing to purchase two to four unit properties, require a down payment of five percent on a fixed rate mortgage and 10 percent on an adjustable rate mortgage.  You’ll also need to occupy one of the units and need to be prepare to have at least six months reserves equal to your monthly principle, interest, taxes and insurance payments to qualify.

The My Community Mortgage Program requires private mortgage insurance. Mortgage Guaranty Insurance Corporation or MGIC is a likely provider your lender will select, so I’ve provided their current pricing here.

Talk to your lender to find out more about this great program for first time home buyers and see if you’re eligible. I’ve covered some of the bells and whistles I think make the program attractive and you can see more by clicking on the first link in the post, but the best way to know if it’s right for you is to talk with loan officer.  

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CALIFORNIA HOME OWNERSHIP TOOLS

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Mortgage Loan Officers, Real Estate Agents & General Contractors are ready to assist you

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

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