These are a couple of first time home buying programs that can assist borrowers with their first home. These programs have different requirements, and can be beneficial to bad credit borrowers, no money down, low credit score, no credit score, and borrowers who just acquired a full time job.
MyCommunity Mortgages have been gaining popularity with the new terms that have been released. This mortgage program was designed by Fannie Mae for low and moderate income borrowers. This 1st time home buying program is also considered a 'zero down mortgage program'. It has a 'no minimum borrower contribution'. Here are the key features of the MyCommunity mortgage program.
1. No minimum borrower contribution.
2. Up to a 40-year mortgage term.
3. Lower monthly payments with a 5-year or 10-year ARM interest-only period.
4. Funds for closing costs, and down payment can be received from a wide range of sources, such as a gift from a family members, gifts, grants or loans from a nonprofit organization, municipality or employers, or the borrower's own funds.
5. Loan-to-value (LTV) ratios up to 100% for 1-unit properties.
6. Flexibility on credit histories, including nontraditional credit histories.
7. Flexibility on sources of income including boarder income even if boarders are not related to the borrower.
8. Cash reserves for closing not required in most cases.
9. Part-time & overtime income is considered.
10. Purchase a single family home (including a condo or co-op), a two-, three-, or four-family home to live in one unit and rent out the others (minimum 3 percent borrower contribution for two- to four-unit properties).
Additional flexibilities provided to:
1. Community SolutionsTM for teachers, police, firefighters, and healthcare workers.
2. Community HomeChoiceTM for disabled borrowers or a family member with a disability.
HomePossible Mortgages is another home buying source for 1st time home buyers. This mortgage program was designed by Freddie Mac to provide a 1st time home buyer's program equal to the MyCommunity Mortgage program. It isn't widely known as the MyCommunity mortgage products, but it has helped many homeowners with their first home purchase. The four HomePossible Mortgage programs are: Home Possible 100, Home Possible 97, Home Possible Neighborhood Solution 100, and the Home Possible Neighborhood Solution 97. Designed to help the home financing needs of borrowers looking for low down payments, flexible sources of funds, 1st time home buyers, move up borrowers, retirees, families in undersved areas, and new immigrants. Here are a few key features of the HomePossible Mortgage programs.
1. Borrower Contribution not required on 1 unit Primary residences. (Excluding Manufactured Homes.
2. Flexible credit terms, included expanded ratios and options for low credit borrowers.
3. Low mortgage insurance coverage levels.
4. Flexible sources of funds.
5. 15, 20, 30, and 40 year fixed rate mortgage programs.
6. 5/1, 7/1, 10/1 CMT & LIBOR Indexed ARMs (2/2/5 caps)
7. 1 to 4 unit Primary Residences.
8. Secondary Financing including Affordable Seconds.
9. Rate/Term Refinances to 100% LTV (No Cash Out)
10. Seller contributions to 6% in most cases.
Additional flexibilities for teachers, firefighters, law enforcement officers, healthcare workers, and military personnel. (US Army, Navy, Air Force, Marines, Coast Guard, and National Guard).
Normally, if the borrower has a 620+ middle credit score they can receive the 'low PMI payments' with 20% coverage compared to the regular 35% coverage. Believe me..there's a huge difference in payments! Most realtors wonder if these programs are still alive, and I'm here to say they are being used FREQUENTLY. A lot of these programs were around for a while, and I dont know why lenders were putting borrowers in to SubPrime Mortgages...instead of FHA, MyCommunity or HomePossible programs.
FHA loans are still around and helping borrowers with low scores (400's) obtain mortgages. The catch is that they need 2.25% down, and they cant have any lates on the credit report for the last 12months. Also, you will need a lender that does 'manual' underwriting. Most underwriters follow the automated underwriting certification only. If they receive a refer/eligible, then they will decline the loan. With manual underwriting the lender can approve a borrower who has 'no credit score'. They can use utilities bills, rental payments, car insurance, phone bills, etc. They will require 3 'nontraditional tradelines' that have been open for 12months and no lates!
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