CONVENTIONAL LOAN MATRIX
Loan Purpose
Occupancy Types
LTV/CLTV
Subordinate Financing
Loan Amount Limits
Borrower Eligibility
Limits on Number of Financed Properties
Homeownership Education and Housing Counseling
Income and Employment
Asset Assessment
Credit Score / History
Debt-to-Income (DTI)
Property Eligibility
Interested Party Credit
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Purchase
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Limited Cash-out Refinance
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Cash-out Refinance
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Principal Residence Properties
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Second Home Properties
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Investment Properties
Purchase
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Primary Residence: 97%
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Second Home: 90%
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Investment: 85%
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Rate / Term Refinance
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Primary Residence: 95%
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Second Home: 90%
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Investment: 75%
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Cash-out Refinance
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Primary Residence: 80%
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Second Home: 75%
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Investment: 75%
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Subordinate liens must be recorded and clearly subordinate the first mortgage lien.
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Minimum loan amount: $50,000.
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Conforming loan limit for a single-family home is $726,200.
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Loan limit for high-cost areas ranging up to $1,089,300. To see loan limits for your area, visit the Federal Housing Finance Agency website.
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Borrowers who are natural persons and have reached the age at which the mortgage note can be enforced in the jurisdiction.
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U.S. Citizens, permanent resident aliens, nonpermanent resident aliens.
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Borrowers must establish ownership interest in the security property and become liable for the note.
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Primary residence - No limit.
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Second home or investment property - up to 10 properties.
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If borrowers on the loan are relying solely on nontraditional credit to qualify.
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HomeReady purchase transactions.
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Purchase transactions with LTV/CLTV/HCLTV ratios greater than 95%.
The stable and reliable flow of income is a key consideration in mortgage loan underwriting. A key driver of successful homeownership is confidence that all income used in qualifying the borrower will continue to be received for the foreseeable future. If the income does not have a defined expiration date and the applicable history of receipt of the income is documented, the income is considered as stable, predictable, and likely to continue. Otherwise, additional documentation from the borrower will be required to analyze the likelihood of the income will continue for at least next three years.
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General income documentation requirements are:
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Paystubs - dated within 30 days of the initial loan application date.
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IRS W-2 forms must cover the most recent one- or two-year period.
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When required, personal Federal income tax returns must cover the most recent one-or two-year period.
Lenders will need to verify a borrower has sufficient funds for closing, down payment, and financial reserves (if applicable) with these following types of documentation: Request for Verification of Deposit (Form 1006), copies of bank statements or investment portfolio statements, copies of retirement account statements. Statements should not be 45 days earlier than the date of the loan application. Either the two- or one-month period of account activity will be needed depending on the loan application type.
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Any deposit exceeding 50% of the total monthly qualifying income will be considered as a large deposit, and it needs to be evaluated, except not on a refinance transaction unless it was from borrowed funds. To document a large deposit, a borrower can provide an explanation along with proof of ownership of an asset that was sold, evidence of gift fund receipt for the wedding; otherwise, the verified balance must be reduced by the amount or portion of the undocumented large deposit.
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For Automated Underwriting System (AUS) loan casefiles, the system will determine whether the minimum credit score is met, such as 620 which is also called as a representative credit score. In addition, if loan casefiles have more than one borrower, an average median credit score will be used in the eligibility assessment. For example, the borrower 1 has a mid FICO score of 615, and the borrower 2 has a mid FICO score of 685, the average median credit score will be 650. However, the representative credit score will still continue to be used for pricing. There are certain transactions that are not subject to the minimum credit score requirement such loans where no borrower has a credit score, which is known as non-traditional credit history.
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Derogatory Credit Events in the Credit Report
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Bankruptcy Chapter 7 or Chapter 11, a four-year waiting period is required from the discharged or dismissal date of the bankruptcy action. However, a two-year waiting period can be accepted if the bankruptcy was filed due to extenuating circumstances, and it must be documented.
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Bankruptcy Chapter 13 that had been discharged, a two-year waiting period is needed from the discharge date, and if it has been dismissed, a four-year waiting period is needed from the dismissal date.
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A foreclosure, a seven-year waiting period is required; however, a three-year waiting period can be accepted if extenuating circumstances can be documented.
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A deed-in-lieu of foreclosure, pre-foreclosure sale, and charge-off of a mortgage, a four-year waiting period is required from the completion date. A two-year waiting period can be permitted if extenuating circumstances can be documented.
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If there is a current past-due on a mortgage account, it cannot be brought to current prior to closing in order to bypass the guidelines, unless it was the servicer's error that was not the borrower's fault. For other non-mortgage accounts that are reported as past due, but not reported as collection accounts, must be brought current.
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For loans underwritten through automated system (AUS), the maximum allowable DTI ratio is 50%.
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For manually underwritten loans, the maximum total DTI ratio is 35% of the borrower's stable monthly income. The maximum can be exceeded up to 45% if the borrower meets the credit score and reserve requirements.
The dwelling must consist of one to four units, and is located in the United State, Puerto Rico, the U.S. Virgin Islands, and Guam. It must be:
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residential in nature as defined by the characteristics of the property and surrounding market area.
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secured by an interest in real property within the meaning of the Internal Revenue Code.
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safe, sound, and structurally secure.
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readily accessible by roads that meet local standards.
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served by utilities that meet community standards.
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suitable for year-round use.
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Interested parties to a transaction include, but not limited to, the property seller, the builder/developer, the real estate agent or broker, or an affiliate who may benefit from the sale of the property.