August 2011 Phoenix Homes Mortgage Update

Since financing is such an important factor in the home buying process we've asked several lenders to give us occasional updates on any interested changes.  Below is a succinct update by one of the lenders used by our clients.

1. Private Mortgage Insurance guidelines have loosened up lately.  Conventional loans for a Primary Residence now allow a 3% down payment with a 680 fico score. 

A buyer with a 620 credit score can get a Conventional loan with 5% down.  The maximum loan amount is $417k for Conventional loans. 

2. Smart Financial Mortgage is able to offer HomePath financing on Fannie Mae REO properties that have this designation.  The best part about HomePath is that Investors with a 660 fico (and 2nd/Vacation Home buyers) are able to buy with only a 10% down payment once the home has been on the market for 15 days. 

There is no Private Mortgage Insurance (even with a down payment of less than 20%), no appraisal required, and no condo certification required on condos. HomePath also allows a Primary Residence buyer to do a 3% down payment (with a 660 fico).  The interest rates and closing costs are higher than a traditional FHA or Conventional loan but in many cases the payment is lower due to the loan not having mortgage insurance. 

We are also seeing that Fannie Mae is selecting HomePath offers over higher priced offers utilizing FHA and regular Conventional financing (probably since they know that they will not have to deal with any appraisal issues).

inPhoenix Realty Partners note: There are nearly 1,500 HomePath properties on the market right now.

3. The minimum down payment for an FHA loan is now 3.5% down.  A borrower can get this down payment from their own funds, a gift from a family member or employer, or by borrowing from their 401k/IRA.  The maximum FHA loan amount is now at $346,250 and a 620 fico score is required.

4. FHA is allowing flips for the rest of 2011.  In the case of a 20% increase in price, FHA requires 2 appraisals as well as a Home Inspection.  Many lenders are still not allowing flips but Smart Financial Mortgage is able to do loans on flipped properties for FHA, VA, USDA, and Conventional loans.

5. 2nd/Vacation Home purchases are now allowed with a 10% down payment with a 680 fico score.

6. Investor loans now require a minimum 20% down payment.

7. Jumbo loans (greater than 417k) now require a minimum 20% down payment.

8. The only true 100% loan available in all of Maricopa County is a VA Loan.  VA loans have great rates and carry no monthly Private Mortgage Insurance even at 100% financing.

All statements need to be verified with the lender and as you should know are all subject to change.