Until recently, it was very difficult for Trivalley home buyers with little cash to get into the housing market due to the strict loan guidelines. I remember about 18 months ago, when home buyers COULD easily attain a 95%-100% loan program to buy a house if they wanted to, but were deciding to wait on the sidelines due to the market conditions. Well, that all changed when the banks had to tighten up the loan guidelines. At that point, the sides were switched with buyers who were ready to move forward, but COULD NOT qualify for a loan based on the new programs and requirements.The combination of qualified buyers who wanted to wait, along with willing buyers who couldn’t qualify had been a leading factor to our current housing inventory in the Trivalley…no one was buying! So what’s changed since?

The stimulus package signed by the President has made a major impact on the conforming loan limits and has opened up many new loan options for a major sector of the buyers in the market. One of these loans (FHA), which was popular in the 1990s but had lost their practicality when Trivalley home prices surpassed the loan limits which were available at the time. Today, the loan limit for an FHA maxes out at $729,750 for the Trivalley and serves as a viable option for individuals with little down payment and less than perfect credit reports, but still make a healthy salary. With the amount of buyers which this opens the door upto, will we see a difference in the market soon? Guess we will have to wait and see.

Below, I have included some highlights of the FHA loan which can be utilized by any homebuyer, not just first time homebuyers. If you have any questions or would like to see if these is a viable option for you, please contact me!

• 97.15% LTV-Low down payment-less money out of pocket
• Any buyer-not just first time buyers.
• Long-term financing-30 fixed, yearly adjustable, intermediate arms.
• We can underwrite, draw docs and fund the loan.
• All loans go to FHA for final approval.
• The loan limit is $729,750 based on County
• 100% gift allowed for down payment and closing costs.
• Can pay revolving and installment loans to qualify.
• Do not count 401K loans in debt ratios.
• Non-occupant co-borrowers are OK-blended ratios.
• Easier qualifying criteria-not fico driven.
• Bankruptcy-Chapter 7-2 yrs. from discharge.
• Chapter 13-12 mos. on time payments
• Alternate sources of credit are ok.
• FHA loans are assumable to qualified borrowers.
• 31/43 debt ratio guidelines-can go higher with good borrower.
• Full documentation only.
• Property must be in good standing with no health and safety issues.
• Seller must pay tax service fee at minimum-approx. $75.
• Borrower must have valid SS number.
• Owner occupied only and moves into home within 60 days.
• Up-front MIP-1.5% plus origination fee
• .5% monthly mortgage insurance for 30 yr. loans and .25% for 15 yr.
• MMI-monthly mortgage insurance must be in place for a minimum of 5 yrs.
• Seller can pay all closing costs up to 6% of the purchase price.
• No reserve requirements on a 1-2 unit purchase.
• Purchase and refinance transactions are allowed.

Chris Kamali is a TriValley Real Estate Agent, helping clients buy and sell homes in Dublin, Pleasanton, San Ramon and Livermore.

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