Blue doors to an old building
Our friend Scott Simmons of Desert Empire Mortgage Company in Palm Springs, CA. recently sent us an email that summarized conventional loan guidelines. This the first time we came across this information in a consolidated and concise form. So we pass his message to you, our readers.
SHORT SALES
Minimum 2 years or more from short sale completion date required by Fannie Mae before a borrower may be eligible for financing again. Individual lenders may require a longer time period.
FORECLOSURES
Minimum 5 years or more from foreclosure completion date before a borrower may be eligible for financing again.
The following requirements for borrowers with foreclosure completion dates of more than 5 years, but within 7 years from the credit report date:
- The purchase of a principal residence will be permitted with a minimum down payment of 10% and minimum representative credit score of 680.
- The purchase of a second home or investment property will not be permitted.
- Cash Out refinances will not be permitted for any occupancy type.
DEED IN LIEU OF FORECLOSURE
4 Years or more for a deed in lieu of foreclosure before a borrower may be eligible for financing again.
Principal residence purchase transactions with a Loan to Value (LTV) greater than 90% where a borrower has a deed in lieu of foreclosure action that was completed more than 4 years, but within 7 years will be Ineligible.
BANKRUPTCIES
The following bankruptcy guidelines apply;
- Chapter 13 bankruptcy requires 2 years from date of discharge and/or 4 years from date of dismissal before a borrower may be eligible for financing again.
- All other bankruptcy types, (chapter 7 for example), requires 4 years or more from date of discharge or dismissal before a borrower may be eligible for financing again.
TOTAL EXPENSE RATIO
Maximum allowable total income to expense ratio will be revised downward to 45%, with flexibilities offered up to 50% for certain loans with exceptionally strong compensating factors.
MINIMUM CREDIT SCORE REQUIREMENT
A 620 minimum “representative” (middle) credit score is required. This is a minimum credit score requirement. Higher scores may be required depending upon property type, classification, loan to value, and other factors, and credit score may determine interest rate available.
Don Grafues
Resource: Scott Simmons, Desert Empire Mortgage Co., Inc.
Resource: Scott Simmons, Desert Empire Mortgage Co., Inc.
