Guidelines for My Community Mortgage - FNMA- Gifts-Funds and More
74My Community Mortgage Product For First Time Homebuyer
All things mortgage have changed drastically and it has made it harder for some borrowers; especially first time homebuyers to obtain mortgage financing due to things like no credit, and inadequate funds for closing from the borrower's own funds and normally non-allowable sources, like cash on hand. Some first time homebuyers have income, but it may be from not so ordinary sources.
There is still hope....No credit trade lines can be fixed with non-traditional credit; like phone bills, prior rent, car insurance, cell phone bills, any debt that is paid monthly when a record that must be obtain. Usually this should be at least a 12 month history.
The funds may be fixed with a gift from a family member which does not have to be repaid, a loan that is secured with a marketable asset, a grant from a acceptable source or a loan from an employer etc. *certain criteria may apply for grants and the source of the grant
Income may come from someone who lives with you and pays you rent. There must be a record that can be verified. This can be cancelled checks etc.
So...with that said, it is still possible to not have a lot of money saved; have insufficient credit lines and still be able to qualify for a mortgage loan. Please note that this does not take into consideration that you have had bad credit and now have no credit. This is not one in the same. No credit is better than bad credit. There might be some instances when bad things have happened and there has not been a signficant re-establishment of credit that may can be worked out. It will depend upon the amount of time and circumstance and what the credit issues are and if the non-traditional credit lines are good.
Go Home
A Flexible Mortgage
In this tight economy there is still need for an affordable, flexible mortgage and normally mortgage lenders offer the Fannie Mae, My Community Mortgage Product. So, if you are lacking a five (5) percent down payment; these guidelines will help you possibly afford a home.
Product Features:
Loan to value to 97% = a 3% downpayment
Up to 40- year term with an interest only option
Mortgage Insurance coverage required = 18% for 97% Loan to value
Income must meet the subject property median income limitations
Condo are eligible, 2, 3 and 4 unit properties are acceptable if the borrower lives in one (1) unit of the property and rents out the other units
At least one (1) borrower who will live in the property must complete prepurchase home-buyer education counseling for first time homebuyers
Loan to value to 97%
Notes
This information is not all inclusive for qualifying for a My Community Mortgage but it will give you some idea if you might fit into this program. The lender of your choice can give you the full details for the income, credit and funds eligibility and help you work through the application process. I have given the highlights and other criteria may apply. Remember that income limitations apply and there are waivers for this issue in some circumstance. I am giving this information to make you informed that there is still financing out there for those who may not qualify for the standard underwriting guidelines for mortgages of 95% financing.
Ask questions, seek answers!
Good Luck!
Qualifying for My Community Mortgage
Credit and Income Criteria:
Flexible credit histories, and nontraditional credit is accepted
Income-sources are flexible, and boarder income from relatives or non relativies may be considered
Funds and Down payment:
There is no minimum contribution required from the borrower's own funds for 1-unit properties
Reserves requirements are also flexible
Cash on hand is an acceptable source for down payment and closing cost
**Note: normally flexible source of funds means a gift from a family member; or a grant or loan from an nonprofit organization or employer. The gift requirement means that it is truly a gift and does not have to be repaid. A loan means that the payment will be added into the debts of the borrower as it must be repaid. Some grants do not have to be repaid.
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Great article for first time buyers.
bayoulady thanks so much for the one up. I appreciate you coming by to read and comment....I needed your support.
Pamela99, as always it is good to hear from you. Thanks so much for stopping by to comment on this hub....I appreciate it.
A great opportunity for people of reasonable means to obtain a mortgage. I say reasonable, because people with severe credit or cash flow issues should not be taking on a mortgage. Also, doing the interest only thing is absolute insanity. The idea of borrowing money is to leverage a larger asset with it. But that's to get ahead. That's to accrue equity. If you are paying interest only, it's like rent. You are basically accomplishing nothing. You might as well go on paying rent until you can afford to borrow a loan you can actually afford to pay back.
To do anything else is part of the reason we're in this recession as we speak.
Home ownership is a wonderful, rewarding thing. The smart thing to do is to KNOW that you want it, and somewhere in the process, start doing necessary things to get to that end.
Like putting money away for a down payment. That's also the responsible thing to do.
Springboard, Thanks so much for your contribution to this hub. I agree fully as I do not recommend interest only mortgages to anyone nor ARM loans actually. I also agree that homeownership should be for those who can afford the home and have the ability to repay the debt. It is a serious undertaking to say the least and more than just saying; I want a home. People forget that cars quit running, the utilities have to be paid and sometimes increase as well as insurance, groceries etc. still have to be met. It is something not to be taken lightly and takes a full commitment. Thanks again for stopping by.
bayoulady Level 1 Commenter 23 months ago
Vote up! Very useful advice for first timers.
Happy 4th!