CHAPTER 9 Programs For Home Bu or Home Buyers
There are 5 different types of programs that are unique for the buyers income, credit, and ability to afford the home and down payment. They are FHA, Conventional, VA, USDA, and Non- Qualified mortgages.
FHA Program
The FHA - Ginnie Mae (GNMA) Program requires 3.5% down payment. This program is unique because it assists the homebuyer who has lower credit scores, higher debt ratios, and less money required for the down payment. It is a government backed loan and is more lenient than other programs. FHA has a mandatory required mortgage insurance that is permanent throughout the life of the loan.This is with the minimum down payment of 3.5%. If you put 10% down, the mortgage insurance will drop off at year 11. This mortgage also has an upfront mortgage insurance fee that is added back to the loan amount and financed through the loan. This up-front mortgage insurance is at 1.75% factor. For example, on $100,000 loan the up-front cost would be $1,750. This affects your monthly payment.
Conventional Program
The Conventional program - Fannie Mae (FNMA) / Freddie Mac (FHLMC) Program requires a minimum of 5% down. If you are a first time home buyer, you can put down 3%. Home Possible is a Freddie Mac program and Home Path is a Fannie Mae program. Both of these program have a minimum down payment of 3%. The Conventional Program requires higher credit scores and lower debt to income ratios. The higher the credit score will allow 63
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