| Loan Terms | Fixed : 30yr, 15 yr ARM : 5/6, 7/6 |
| Minimum Loan Amount | $125,000 |
| Mortgage Insurance | Not required |
| Income type | - 24 or 12 months Bank statements
- 1099 only
- Asset depletion
- 2 or 1 year full doc
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| Maximum DTI | 50% with below exceptions - 55% - FICO ≥ 680, Loan ≤ $1.5MM, LTV restrictions (See matrix), +3 months reserves, no asset depletion
- When non occupant co-borrower’s income is used, occupying borrower’s sole DTI is capped at 55%
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| Eligible Borrowers | - US citizens
- Permanent resident aliens (front and back copy of resident alien card required)
- Non-permanent resident aliens - must be legally present in the U.S. with an acceptable visa type (E, G, H, L, NATO, O, TN-1, TN-2) or EAD (A03, A04, A05, C03 series, C08, C09, C33). Status must be current and may not expire for a minimum 6 months from Note date.
- Non occupant co-borrower allowed for immediate family member. Purchase and Rate/Term only. Non-occupant coborrower certification must be completed.
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| First Time Home Buyer | - A borrower who has no ownership interested in a residential property during the 3 year from purchase contract date.
- Minimum FICO 660
- 0x30x12 month rent payment history is required
- Expanded DTI limits not available
- FTHB without rental history: See matrix for LTV restrictions, full doc or bank statement only, standard tradelines required, no gift funds, no non-occupying co-borrowers
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| First Time Investor | - A borrower who has not owned at least one (1) investment property for a minimum of twelve (12) months anytime during the most recent 36 months.
- Minimum FICO 660
- Max loan amount $750,000
- Must have 12 months primary mortgage history
- Gift funds not allowed
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| Properties | - Eligible: Single family, PUD, Condo, and 2-4 units
- Rural property: Eligible for primary residence only. Property is rural if surrounding area zoned agriculture, distance to schools and amenities greater than 25 miles, less than 25% of surrounding area is developed, or comparable properties are more than 5 miles from the subject property
- Ineligible: C5/C6/Q6 rating, Manufactured/Mobile home, Condotel, Co-Op, Property subject to oil and/or gas leases, Room and Board facilities, Adult assisted living or care facility, Unique property, Properties over 20 acres, etc.
- Minimum GLA: 600 sqft
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| Appraisal Requirements | - Age of report: 120 days from closing. Re-cert will extend additional 60 days. After 180 days, new report is required
- Loan amount > $2MM = 2 full appraisals (LTV is based on lower of two values. All inconsistencies between the 2 report must be address and reconciled)
- Loan amount ≤ $2MM = 1 full appraisal
- CU score ≤ 2.5 or CDA is required, except when 2nd appraisal is obtained. If CDA value is more than 10% below the appraised value, a field review is required. If field review value is within 5% from appraised value, appraised value is used, for more than 5%, second appraisal is required.
- Transfer appraisal is allowed.
- FEMA declared disaster area: Full appraisal needs to be re-done if incident happened after original appraisal
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| Condo | A standard HOA cert is required. [Limited Review: O/O 80% LTV, 2nd Home 75% LTV, Investment 75% LTV] - Project is ineligible if it has significant deferred maintenance, deficiencies, or substantial damage.
- Project must not be listed on FNMA CPM as ‘Unavailable’.
- Detached and 2-4 unit condo is waived from project review.
- Attached units in established projects located in Florida are subject to more restrictive LTV ratio requirements. See FNMA Seller’s Guide section B4-2.2-04.
- A borrower’s concentration in a condo project is limited to 2 units
- Ineligible project features in addition to Fannie Mae warrantable criteria
- Condo conversion less than 2 years
- Projects with adverse environmental issues involving safety, soundness or habitability
- New project where minimum 50% of units are not sold/under contract
- Non-warrantable features are acceptable as below (only 1 non-warrantable factor per project considered)
- Full review required: CC&R, Bylaws, Articles Of Incorp, Budget, and Balance Sheet
- Commercial space up to 50%
- No more than 20% of units are delinquent on common expense assessments
- Developer is in control of HOA as long as the master agreement provides for the homeowners to take control upon date agreed or predetermined % of unit sales occur
- Investor concentration up to 60%
- Single entity ownership up to 25%
- Litigation that lawsuit(s) are not structural in nature which impact the subject unit and do not affect the marketability, and potential damages do not exceed 25% of HOA reserves or letter from insurance carrier/attorney that insurance carrier has agreed to conduct defense and insurance coverage is sufficient to cover the litigation expense.
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| Number of Financed Properties | No limit, but aggregated UPB cannot exceed $5MM or 8 properties |
| Housing Payment History | Documented 12 months history is required. VOM/VOR completed by private party or non-institutional lender must be supported by 6 month cancelled check or similar - 1x30x12: LTV per matrix
- 0x60x12: 5% reduction (See matrix)
- No housing history of less than 12 months verified (i.e. living rent-free) is eligible with restrictions:
(1) Minimum FICO 660 (2) 45% DTI (3) Max loan amount $1MM (4) Primary residence and second home only
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| Age of Credit Documents | Age of documents from Note date: Credit - 120 days, Income/Asset - 60 Days |
| Credit Requirements | - Must have at least 2 credit scores for each borrower. All 3 bureaus must be unfrozen
- Minimum 2 reporting for 24 months or 3 reporting 12 months. All with activity in the last 12 months. Accounts can be open or closed. VOR from professional management company can be used as tradeline.
- Ineligible accounts for tradeline
- Debts in deferment, including student loans
- Accounts included in BK/DIL/SS/FC
- Authorized user accounts
- Charge-off, Collection accounts
- Limited credit acceptable (Borrower who doesn’t meet above): Primary/2nd Home only. Max DTI 45, Minimum 10% borrower’s own funds.
- Any non-mortgage debts more than 30 days delinquent must be paid on or before closing
- Collection and charge-off less than 24 month total > $2,000 must be paid off. 24 months or older can remain open with maximum $2,500 per occurrence. Medical collections can remain open regardless of amount
- All judgements, garnishments, and outstanding liens must be paid off
- Disputes on account must be explained by borrower
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| Derogatory Credit Event | - Seasoning is measured from discharge/dismissal or settlement date to the Note date.
- Bankruptcy Chapter 13 has no seasoning requirement, no restrictions on LTV.
- No multiple events in 7 years
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| Forbearance | Eligible after forbearance has been existed, and 3 months consecutive payments have been made prior to Note date |
| Employment and Income | Bank Statements (24 or 12 months): - Most recent 24 or 12 months personal or business bank statements
- The primary borrower (greater than 50% of income) must be self employed for at least 2 years (25% or greater ownership), verified by business license or CPA/CTEC/EA
- In case personal bank statement is used, 2 months business bank statements are still required to evidence on-going business activity and transfer to personal accounts
- Multiple NSF may cause the loan to be ineligible
- Evidence of current business receipts within 20 calendar days from funding date is required
- Income analysis: Total deposits (less any inconsistent deposits) minus expense factor, divided by 24 or 12 and multiplied with % of ownership. Inconsistent or large deposit should be sourced or excluded
- Ending balance trend: Each months ending balance should show a trend of stable or increasing over the period.
- Expense factor options
- Fixed 50%: Eligible for all types of business. If the type of business operates more efficiently or typically has a materially different expense factor (lower than standard expense factor), then the expense factor per either a CPA/CTEC/EA letter or P&L may be applied. The underwriter may use an expense factor higher than the standard 50% when the analysis of the bank statements reflects higher expenses.
- Business expense letter: CPA/CTEC/EA letter specifying most recent tax year’s business expense ratio. Expenses must be reasonable. Minimum 20% expense
- P&L: CPA/CTEC/EA signed/dated P&L covering the same period used for bank statements. The annual deposits on the bank statements must be at least 75% of the gross receipt per P&L. Minimum 20% expense
- Qualifying Income: Lower of Income on URLA or Bank Statements analysis
1099 Only (2 or 1 year):- Borrower must be paid on a 1099 basis for at least 2 years. The borrower can have no ownership of the 1099 payor company
- Different employer(s) from year to year or multiple employers must be documented as same business type.
- 3rd party documentation (CPA/EA/CTEC) supporting 2 year history when 1 year 1099 used.
- Current earnings must be documented with
- Payroll check stub reflecting YTD; or
- 3 months bank statements supporting 1099 monthly income
- 10% expense factor applied
- 4506-C and tax transcripts are required for 1099
Asset depletion (Or Bank Statement with asset depletion): - Can be used in combination with other income
- 6 months personal asset statement
- Income: Eligible personal asset - Reserves, then divided by 84
- Any other person holds account jointly with borrower must be on the loan
- Balance discounted at 90% for stocks/bonds/mutual funds, and 80% for retirement accounts (can be used only if distribution is not already set up)
- Business funds, non-liquid assets, annuities of any type and crypto currency are not eligible
Rental Income: - Purchase transactions:
- Rental income will be determined by appraisal 1007 form
- Copy of the existing lease agreement when the property is currently tenant occupied, need to verify that it does not contain any provisions that could affect the first lien position of the subject property
- Refinance transactions + rental income for REO properties:
- Long term rental: Lease agreement (an expired lease agreement that has verbiage that states the lease agreement becomes an month-to-month lease once the initial term expires is allowed), and 2 months bank statement with proof of rental income receipts (Business bank statement used for income analysis cannot be used for proof of receipt)
- Short term rental: May be used by using 12-month look back period statements or annual statement provided by the online service. 75% of verified monthly rental income (average 12 month) can be used to offset PITIA of the rental property. Provide online listing to show property is activity marketed as a short term rental
- Departure residence: Lease agreement, Proof of security deposit and first month rent
Full Doc : 4506-C is required for all income typesWage (2 or 1 year): - Tax return + WVOE or paystub & 2 years W2
- A verbal VOE completed within 10 days of note
Self-employed (2 or 1 year):- Tax return
- YTD P&L (Borrower prepared & signed acceptable)
- Existence of business within 30 days of note must be verified by CPA letter or regulatory agency/licensing bureau.
Other Income: Follow FNMA |
| Residual Income | Required for DTI > 43% only - Calculation: Gross Monthly Income – Total Monthly Obligations
- Minimum residual income: $2,500 plus additional $150 per dependent
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| Debts | Follow FNMA except below - Any non-mortgage account more than 30 days delinquent must either be brought current or paid off at closing
- Credit refresh is required if note date is after 30 days after credit pull. Balances/payments must be updated for DTI
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| Assets and Reserves | Most recent 2 months bank statements or VOD - Must be liquid asset
- All large deposits must be sourced, otherwise needs to be deducted from eligible asset balance
- Stocks, bonds, mutual funds are used at 90% value for closing funds and reserves
- Retirement asset is discounted at 80% for closing and reserves
- Gift funds are allowed for all occupancy types and can be used for down payment and closing, but not reserves
- Gift funds not allowed for First Time Investor
- Gift of equity allowed for primary residence only
- Business funds can be used for closing funds and reserves, if borrower must be 100% owner. Two methods can be used
- 1) Balance sheet method: It must reflect positive working capital (Current asset - Current liabilities). The result is maximum amount allowed to be used; or
- 2) Business expense coverage method: Using most recent bank statement. [Ending balance - down payment/closing cost/reserves + any personal funds] must be more than 2 months average expense as reflected on P&L or expense factor
- Foreign asset must be transferred to US account in borrower’s name at least 10 days prior to closing
- Ineligible asset: Unsecured loans, any assets used as income on asset depletion
Reserves (PITI for property x months) - Loan amount up to $1MM: 6 months
- > $1MM < to ≤ $1.5MM: 9 months
- > $1.5MM: 12 months
- Reserve can be reduced by 3 months with 5% LTV reduction from Matrix (only once)
- Cash-out proceeds can be used, except when asset depletion income is used
- For ARM loan, calculation is based upon initial PITIA, not the qualifying payment
- No reserves for R/T refinance where transaction results in a reduction to payments of 10% or greater. DTI >50% or housing history worse than 1x30x12 not eligible
- Gift funds cannot be used
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| Title Ownership | Individual, Joint Tenants, Inter-Vivos Revocable Trusts |
| Impound | Impound is not required, unless a loan is HPML or LTV = 90% (State other than CA 80%). Flood insurance must be impounded |
| Power of Attorney | POA must contain expiration date. Other requirements follow Agency guideline |
| Compliance | - No Section 32 or state high cost
- Points and Fees max 5% limit
- Borrower’s attestation for ATR is required at note sign
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| Purchase | - No minimum borrower’s contribution required
- Non arm’s length transaction is allowed for primary only, not FSBO. Proof of EMD required. Purchase between family member is acceptable with only full doc, seller’s 12 months mortgage history is required to confirm no foreclosure bailout
- Flip transaction: Seller acquired property within 365 days from borrower’s purchase agreement date, and borrower’s sale price is greater than seller’s acquisition price by more than 10%
- Increases in value must be documented with appraisal comment and actual cost to construct or renovate
- The property must have been marketed openly and fairly, through MLS, auction, FSBO offering or developer marketing
- Transaction must be arm’s length
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| Interested Party Contribution (IPC) | - Can only be used for closing costs and prepaid expenses, not down payment or reserves
- Maximum 9% if LTV ≤ 75%, Maximum 6% if LTV > 75% for primary residence/2nd Home. Maximum 3% for Investment
- Exceeding IPC after above use is considered as sales concessions, will be deducted from sale price/appraisal value for LTV
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| Rate & Term | - Max Cash-back to borrower is 2% of loan amount or $2,000 whichever is lesser
- Payoff of a non-purchase second lien seasoned a minimum of 12 months from date of application. The second lien must not evidence draws exceeding $2,000 within the past 12 months and withdrawal activity must be documented with a transaction history of the line of credit
- Buy out a co-owner pursuant to an agreement
- Properties currently listed for sale must be taken off market before application date
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| Cash-Out | - Max cash-in-hand:
- LTV ≤ 60% unlimited
- LTV > 60% (80% of loan amount up to $1MM)
- 6 months title seasoning is required, except the following
- Mortgage being paid off was used to purchase the property, and has 24 months or less term as evidenced with settlement statement and original note
- Funds used to purchase the property was unsecured loan or loan secured by other property. All cash-out proceeds must be used to pay off or pay down the loan used for purchase
- Inheritance or legally awarded property
- For properties owned 12 months or longer, the LTV/CLTV is based upon the appraisal value
- If the subject property was purchased within the 6 - 12 months period prior to the application date for the new loan, the LTV will be based on the lesser of the sales price (plus any improvements) or the current appraised value. Improvements documented with plans or work performed lists, permits, contracts, receipts supporting all work completed
- Properties previously listed for sale must be seasoned at least 6 months (from the listing expiration date to Note date)
- Proceeds can be used for reserves, except asset depletion income
- Non occupant co-borrower not allowed
- LOE to explain purpose of cash out required
- Loan not eligible for cash-out: Texas50(a)6
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| Subordinate Financing | - Allowed up to maximum CLTV as per matrix. CLTV is calculated at the max available line amount unless it is past draw period
- Must be institutional
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| Prepayment Penalty | Investment property only. 6 months of interest will be charged if payment exceeds 20% of original principal balance. Borrower can choose the PPP period from 0 to 5 years from note date |
