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Conforming Loans - what the bank wants to see

First of all: What is a conforming loan?

Wikipedia Definition: 

In the United States, a conforming loan is a mortgage loan that conforms to GSE (Fannie Mae and Freddie Mac) guidelines. The most well-known guidelines is the size of the loan, which as of 2013 was generally limited to $417,000 for single family homes in the continental US.

Ok, so what how does a buyer qualify for a conforming loan?

According to Peggy Fowler, Mortgage Specialist, Equity Resouces:

CONFORMING LOANS

  • 5% down for Primary Residence
  • 10% down for 2nd home
  • 20% down for investments (higher rates)
  • With 20% down there is no mortgage insurance
  • Less than 20%, call me for the quote which varies with certain criteria
  • There are Rate bumps (add on’s) due to lower loan amounts and lower credit scores
  • Disputed accounts on the credit bureau may need to be addressed – worst case they will need to be removed or corrected which can impact scores.
  • A borrower may convert an existing primary residence to a rental property and use the rental income to qualify *IF* they have at least 30% equity in it, proven by an appraisal minus the outstanding liens.  If this is done then 75% of the rental income may be used to offset the mortgage payment for debt ratio purposes. The rental income must be documented with a copy of a signed lease AND the receipt of the security deposit from the tenant and it must be deposited into the borrowers account.
  • Installment debt with less than 10 payments may be excluded from the debt ratio.  (leases not included in this rule)
  • 401K loan payments are not included in the debt ratio when the asset balance exceeds the outstanding loan balance as documented with the most recent quarterly statement.
  • Deferred student loans are included regardless of the length of the deferment.  2% of the balance OR verification of the monthly payment from the servicer will be used in liabilities/debt ratio.
  • The 5% down for a 1-unit primary residence may be a gift

Copyright © 2017 Mid Florida MLS. All rights reserved. The data relating to real estate for sale on this web site comes in part from the Internet Data Exchange Program of Mid Florida MLS. Information provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Shirley International Realty participates in the MFRMLS Internet Data Exchange (IDX) program, allowing display of other MFRMLS broker's listings on this site. However may not include all listings currently available. Information is deemed reliable but not guaranteed. Information last updated at 2017-06-29 01:45:21.

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Rick Giles
Phone: 941-400-0848‚Äč
Email: SiestaRick@gmail.com

Bright Realty
5218 Station Way
Sarasota, FL 34232
941-552-6036

 

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