Government Backed Loans
USDA Rural Development Loans
Single-Family Housing Guaranteed Loan Program (SFHGLP)
Single-family guaranteed loans must have specific loan terms in order to meet program requirements. Below you can find some of the most important information about the SFHGLP terms to ensure your loan meets the program requirements.
Resources
- Want to see if your client qualifies for SFHGLP? Click here.
- Need to check if the would-be loan holder lives in an eligible rural area? Click here
- Want to learn more about USDA Loans? Check out their resource library here.
Maximum Loan Amount
The main formula for the maximum SFHGLP is:
Market Value / .99 = Maximum Loan Amount
Let’s look at some of the specifics before moving on:
The maximum Loan Amount is determined by the applicant’s income and repayment ability, and by the fair market value of the property. **
**Loan to value can exceed 100 percent of the market value when the upfront guarantee fee is financed.
An applicant is permitted to finance reasonable and customary expenses associated with purchasing a home if the total amount financed does not exceed the following limits:
- The applicant’s documented repayment ability; the fair market value of the property.
- The maximum loan amount is calculated by dividing the appraised value by .99.
- This results in a loan amount that includes the upfront 1% guarantee fee.
Interest Rates
Effective October 1, 2019, the maximum interest rate cap was eliminated.
The lender and the borrower are free to negotiate a mutually acceptable fixed interest rate. That being said, the rate must be locked by the time of loan settlement.
It is important to note that adjustable-rate mortgages, balloon mortgages, loan terms other than 30 years, and negative amortization are all ineligible loan terms for SFHGLP.
If the interest rate is not locked at the time the conditional commitment is issued, or if the interest rate increases prior to loan closing, the lender must make note of the increased rate, provide documentation to support the increase, and resubmit the application in GUS.
In some instances it is important to note:
- In cases of construction financing, a warehouse lender may charge an interest rate that exceeds the long-term note rate.
- Once the construction phase is complete, the rate will revert to a rate no higher than the underlying note rate.
Loan Terms
The required loan terms for qualifying for the SFHGLP are relatively simple. They are as follows:
- The loan term must be 30 years and the loan must fully amortize in that period.
- All payments are due and payable monthly.
- Prepayment penalties are not allowed.
- Want to see if your client qualifies for SFHGLP? Click here.
- Need to check if the would-be loan holder lives in an eligible rural area? Click here
- Want to learn more about USDA Loans? Check out their resource library here.
FHA Purchase & Refinance Loans
Important FHA Guidelines for Borrowers
The FHA, or Federal Housing Administration, provides insurance on loans made by approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.
Let’s take a look at some of the requirements to be approved for an FHA loan in 2021.
- FICO® score at least 580 = 3.5% down payment.
- FICO® score between 500 and 579 = 10% down payment.
- MIP (Mortgage Insurance Premium ) is required.
- Debt-to-Income Ratio < 43%.
- The home must be the borrower’s primary residence.
- Borrower must have steady income and proof of employment.
What Is an FHA Loan?
An FHA Loan is a mortgage that’s insured by the Federal Housing Administration. They allow borrowers to finance homes with down payments as low as 3.5% and are especially popular with first-time homebuyers.
FHA loans are a good option for homebuyers who have not yet saved enough for a down payment. Borrowers who have suffered from bankruptcy or foreclosures may qualify for an FHA-backed mortgage.
Benefits of an FHA Loan?
- Easier to Qualify – FHA provides mortgage programs with lower requirements.
- Competitive Interest Rates – FHA loans offer low interest rates to help homeowners afford their monthly housing payments.
- Bankruptcy / Foreclosure – Having a bankruptcy or foreclosure in the past few years doesn’t mean you can’t qualify for an FHA loan.
- Determining Credit History – There are many ways a lender can assess your credit history, and it includes more than just looking at your credit card activity.
Veterans Administration (VA) Loans
VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.
Benefits of a VA Loan Outlined By The VA:
- Purchase Loans – Help you purchase a home at a competitive interest rate often without requiring a downpayment or private mortgage insurance. Cash Out Refinance loans allow you to take cash out of your home equity to take care of concerns like paying off debt, funding school, or making home improvements.
- Interest Rate Reduction Refinance Loan (IRRRL): Also called the Streamline Refinance Loan can help you obtain a lower interest rate by refinancing your existing VA loan.
- Native American Direct Loan (NADL) Program: Helps eligible Native American Veterans finance the purchase, construction, or improvement of homes on Federal Trust Land, or reduce the interest rate on a VA loan.
- Adapted Housing Grants: Help Veterans with a permanent and total service-connected disability purchase or build an adapted home or to modify an existing home to account for their disability.
Eligibility Requirements for Different VA Loans
Purchase Loans and Cash-Out Refinance
VA-guaranteed loans are available for homes for your occupancy or a spouse and/or dependent (for active duty service members). To be eligible, you must have satisfactory credit, sufficient income to meet the expected monthly obligations, and a valid Certificate of Eligibility (COE).
Interest Rate Reduction Refinance Loan (IRRRL)
The IRRRL is a “VA to VA” loan, meaning it can only be done if you have an existing VA guaranteed loan on the property. The IRRRL is generally performed to lower the interest and reduce the monthly payment on the existing VA guaranteed loan.
Native American Direct Loan (NADL) Program
The NADL program helps Native American Veterans purchase, construct, improve, or re-finance a home on Native American trust lands. Your tribal organization must participate in the VA direct loan program. You must have a valid Certificate of Eligibility (COE)
Adapted Housing Grants
VA helps Veterans with certain total and permanent disabilities related to your military service obtain suitable housing with either a Specially Adapted Housing (SAH) or Special Housing Adaptation (SHA) grant.
Top 10 Reasons to Use Capital Mortgage Services
- Capital Mortgage Services is a Mortgage Banking Firm, not a Broker
- Approval in Minutes
- FHA Direct Endorsement Lender
- Table Funding
- Best Service in Town
- Electronic Access to Current Market Conditions
- Home Owned and Operated
- Lowest Rates in Town
- Credit Freedom
- “We Can” Attitude
At Capital Mortgage Services, we’re happy to be a part of your American dream.
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Siwell, Inc. dba Capital Mortgage Services NMLS 149169
Licensed by the Department of Business Oversight under the California Residential Lending Act
MORTGAGE BANKER DISCLOSURE
Residential Mortgage Loan Originator: Siwell, Inc. dba Capital Mortgage Services
Organization NMLS ID: 149169
Residential Mortgage Loan Officer Royce Lewis NMLS ID: 151122
Residential Mortgage Loan Officer Linda Lewis NMLS ID: 151120
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FOR VIRGINIA BORROWERS, TOTAL FINANCE CHARGES OVER THE LIFE OF THE LOAN MAY INCREASE IF APPLICABLE.