FHA/VAGovernment-Insured

Loans

[Mike Mulgrew]

[May 2010]

Trivia Question• What percentage of homebuyers used FHA/VA

government-insured loans in 2009?

47%

Trivia Question• What percentage of first-time homebuyers used

FHA/VA government-insured loans in 2009?

63%

What FHA is• Federal Housing Administration within HUD• Insures loans that meet certain criteria• Prime program with prime rates• Introduced in 1934 as a secure, accessible

housing option

FHA has been an option for• First-time homebuyers• Buyers with little/no cash for down payment• Buyers with limited/no traditional credit• Buyers with past credit challenges that have

been rectified• Buyers who need non-occupant co-borrower

assistance• Buyers wanting flexible income/debt/credit

requirements

FHA is attractive due to…• Low down payments• Cash reserves not required on 1-2 unit

properties• No restrictions on amount of income• Credit allowances are more lenient• Non-traditional credit allowed

FHA offers great opportunities……for buyers.• Low cash requirements for borrowers• Low margin options• Fully assumable to qualified buyers• Temporary higher loan limits

How FHA benefits YOU• More buyers may qualify• Can help close the sale – Seller contribution

allowed• Can help drive more business – Temporary

interest rate buy downs• Can help move more inventory – Streamline

203k for fixer-uppers

What VA is…• US Department of Veterans Affairs• Created to make housing available for veterans• Loans not limited to military bases• Loans are available in all 50 states and District

of Columbia

Trivia Question• How many people are eligible for VA financing?

70 million.

VA determines eligibilityThe following may be eligible:• Active duty personnel with qualifying service• Personnel with previous qualifying military service• Reservists, National Guard and Coast Guard

personnel with qualifying service• Unmarried surviving spouse of a veteran killed as a

result of service-related activities• Honorably discharged personnel• Public Health Service Officers, cadets/midshipmen in

the Army, Navy, Air Force and Coast Guard academy may also be eligible (final determination is made by the VA)

VA financing features• Loan amounts up to $1,500,000*• Up to 100% loan-to-value• Single qualifying ratio of 41%• No prepayment penalty• Non-traditional credit may be acceptable• Fully assumable to qualified buyers• VA funding fee required

VA product options• Long-term fixed rate terms• Temporary or permanent interest rate buy

down options (can be paid by buyer and/or seller):• 3/2/1• 2/1• 1/1

Eligible properties• Single-family primary residences (attached and

detached)• 2-4 unit properties• VA-approved condos• Planned Unit Developments (PUDs)• Manufactured housing• New construction from VA-approved builders

Requirement• Property MUST be owner-occupied• In some cases, spouse can fulfill occupancy

requirement

I can help your qualified clients• Obtain their official Certificate of Eligibility (COE)

from the VA, stating what their entitlement is• Obtain a PriorityBuyer® preapproval that tells

you how much home they can finance

Programs

Home OpportunitiesSM

• For first-time and low-to-moderate income homebuyers

• Accommodates constraints regarding:• Down payment• Income and credit requirements• Source of funds

Programs

Special Programs Administration (SPA)

• Administers Community Assistance Programs (CAP) available in certain communities

• Includes the following programs:• Mortgage Revenue Bonds (MRBs)• Down Payment Assistance Programs (DAPs)• Mortgage Credit Certificates (MCCs)• Section 8 Housing Choice Voucher (HCV)

Programs

Community Development Mortgage Program

• Low-to-moderate income borrowers and borrowers purchasing in low-to-moderate income tracts

• Features include:• Long-term fixed rate terms• Low down payments• LTV up to 98%

• Homebuyer education• No mortgage insurance• Eligibility up to 80% median family

income

QUESTIONS?

Tools

• Mortgage Product Guide

• Materials pertaining to our specific FHA/VA products

FHA Sweat Equity• Buyers with appropriate skills perform

predetermined tasks during the construction process

• Labor can be credited toward down payment

This information is for real estate professionals only and is not intended for distribution to consumers.

Insert your company’s specific disclosure statement here.

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