As of April 18th FHA mortgage insurance is as follows:
15-year loan term less than 10% down % : 0.50% per year
15-year loan term, loan-to-value 10%+ down : 0.25% per year
30-year loan term, loan-to-value less than 5% down : 1.15% per year
30-year loan term, loan-to-value 5%+ down : 1.10% per year
To calculate your monthly mortgage insurance premium, multiply your mortgage loan size by your insurance premium, and divide by 12 months. You also have a 1% upfront mortgage insurance premium to HUD financed into your loan amount.
For buyers who do not need or qualify for down payment assistance we have the Minnesota Mortgage program comes with a subsidized interest rate .375% – .625% below market rate for government loans and .25% less for conventional loans. Mortgage daily interest rates can be seen at www.mnhousing.gov
The 1st question my first time homebuyers ask is an underwriter looking at when trying to get approved for a new mortgage. The answer I always give is it’s big picture. Here are the primary points.
Credit- underwriters are looking for a minimum of a 620 credit score. Having said that they are also looking for credit quality and credit depth. How many tradelines do you have and for how long? A borrower could have a 620 credit score with 3 settled collections and $250 Macys credit card. In this instance this wouldn’t be an automatic denial, however the other aspects of their finances must be very strong. 3 years after a foreclosure or short sale, 2 years after a chapter 7 bankruptcy, and just 12 months after a Chapter 13 (with trustee permission) you can purchase a home again. BUT the underwriter will be looking at 2 things. Did you re-establish new credit and have you paid it on time? They will also be looking at the immediate previous 12 months. If in the last 12 months you were late on your car twice and accumulated 2 new utility collections an underwriter is not going to approve that loan due to previous financial catastrophe and failure to prove yourself credit worthy again.
Income/Employment- Is it consistent, stable, and likely to continue for 3 years. For employment you need a 2 year work history.Full time enrollment in secondary education does count for part of that history if your current job is full time. If your employment status is seasonal, temp worker, contractor, self employed, or part time you must have a 2 year history (no secondary education waiver) If you have bonus, overtime, or commission income that you would like to use for qualifying you must have that job for 2 years. In the case of child support, alimony, social security disability, ect you must prove stability of past receipt and proof it will continue for 3 years minimum. In the event of child support you’d prove the child’s age along with paternity court order or divorce decree For disability income you’d provide a dr’s note indicating your disabled condition is not likely to change in the next 3 years.
Assets- As you can see there are many sources for help with down payment. The main important thing important with assets is clean bank statements. I define clean as no cash, no non payroll deposits unless a tax refund, insurance settlement, ect. “my mom owed me some money and she paid me back” is not going to work for underwriting. When receiving down payment assistance 99% of the programs require a percentage in contribution of “your own funds” if someone paid you back, gifted, or lent you money it is not your own funds. Unfortunately stated explanations are rarely acceptable. Definitely bounced checks, NSF’s, overdrafts onto a line of credit, or regular overdrafts are acceptable. This indicates to an underwriter that you are having difficulty paying your current debts and obligations without having a home mortgage debt.
Don’t allow minimal property condition challenges stop you from utilizing traditional non rehab 203ks FHA financing.
Often times you will see a property listing stating cash/conventional only with minimal derogatory property conditions. As a small bank we are able to escrow for city required repairs that the city mandates to be made prior to closing and or FHA required work orders called on an appraisal.
Often times on bank owned REO the seller will not perform or allow work to be done to the home prohibiting a successful closing. If the work orders are minimal I will escrow for the work to be completed after close providing you as the buyer sign an escrow agreement of 1.5x a reputable contractors bid. You have 7 days to finalize the repairs as your funds will remain at our bank until final inspection has cleared.
#1 Top Producing Team for 2011 and 2012 in the entire State of Minnesota
First Time Home Buyers Entire MN 11 county metro Up to $10,000 down payment assistance. Hennepin, Ramsey, Anoka, Isanti, Sherburne, Wright, Chisago, Scott, Dakota, Ramsey, and Washington First Time Home Buyer Programs
My team was awarded the 2011 and 2012 housing partnership award for our lending committment and top production for 1st time home buyers using Minnesota Housing products in support of affordable housing. Minnesota Housing Website.