Check out our home buyer lending guideline cheat sheet before you purchase your next home! Let’s begin by looking at one of the most important lending factors–your FICO score. The FICO score requirement will vary based upon the type of loan–always consult with a reputable lender before beginning the home buying process. The FICO score required may also vary depending upon the amount of the down payment:
2017/2018 FICO Requirements (subject to change)
Conventional loan: 620
Jumbo loan: 680
Note: Consult with your lender regarding jumbo loans that allow for less than a 680 FICO score.
Now we’ll look at how long the appraisal is good for based upon the type of loan.
Appraisals Are Good For:
Conventional loan: 120 days
FHA: 120 days (30 day extension available with valid sales contract executed within 120 days of appraisal effective date)
VA: 180 days
Many buyers need closing cost assistance–here are the allowable closing cost credits from the seller (based upon the purchase price).
Allowable Closing Costs Credit From Seller:
Conventional loan with less than 10% down: 3%
Conventional loan with less than 25% down, but more than 10%: 6%
Conventional loan with more than 25% down: 9%
Conventional financing on investment property: 2%
FHA financing maximum contribution from seller: 6%
VA financing minimum contribution: 4%
There are lots of “flip” homes available for purchase–here are three things you should know about buying flip homes:
- You can purchase a flip home with conventional or VA financing without any problems.
- Effective 12/31/2014 the FHA waiver for FHA “flips” expired, therefore FHA will not allow financing on a “flip” property within 90 days of purchase. If the sale is within 91-180 days from the last sale, and the sales price is more than 100% of the last sales price, then two appraisals are required.
- Jumbo lenders don’t have any specific guidelines for flips, but they will scrutinize values more. It’s not uncommon for lenders to lend less on high-end flips. Also, most jumbo lenders require two appraisals.
Borrowers often need gift funds to purchase a home–let’s look at the guidelines.
Borrower Using Gift Funds Guidelines
Conventional loan: no limitation on gift funds
VA loan: no limitation on gift funds
Jumbo loan: If the LTV (loan-to-value) is greater than 80%, borrower must make 5% contribution from his/her own funds–after the minimum has been met, gift funds can be used to supplement the down payment and closing costs. If the LTV is less than 80%, all funds need to complete the transaction can come from a gift.
2017 Conventional and FHA Loan Limits
Conforming loan single family residence: $424,100
FHA loan single family residence: $279,450
The loan limits will vary based upon whether the housing type is a single family, two family, three family or four family housing product.
If you have experienced bankruptcy, a foreclosure or have completed a short sale, here are the wait periods before you can obtain a home loan.