Back in August 2008 I wrote a post (And You Really Thought You Can’t Get a Home with $100.00) about FHA HUD homes
having a special deal on certain properties that allowed only $100.00 down.  Well Folks FHA and HUD have decided to cancel this
program for the time being. The marketing company for Hud homes is Arizona is www.mcbreo.com.  They announced on
July 19, 2010 the incentive Expiration for Arizona and Nevada.

from mcbreo website: ” HUD’s $100 Down payment initiative will expire on July 31, 2010.  The $100 down payment was
for owner occupants (Any individual who purchases a HUD home as their primary residence for at least 12 months after
closing and who has not purchased a home from HUD as an owner occupant in the past twenty four months) purchasing a
HUD Home with FHA financing. This incentive will continue to be eligible for all contracts signed by seller by
July 31, 2010.  Contracts signed after the July 31,2010 deadline will not be eligible for the $100 Down payment incentive.”

This program was a good help to many buyers, and I am sad to see it disappear.  It seems like there are fewer and fewer
options for homeowners.

Gary Miljour- Mortgage Lending for Tempe Arizona

Proceed with Confidence

Follow me: 

BK-0907366

Sunstreet Mortgage, LLC NMLS#145171

Gary Miljour Licensed Loan Originator NMLS#207208

Gary Miljour- Mortgage Lending for Tempe Arizona

Proceed with Confidence

Follow me: 

BK-0907366

Sunstreet Mortgage, LLC NMLS#145171

Gary Miljour Licensed Loan Originator NMLS#207208

Cherry Creek Mortgage Company announced on February 20, 2009 that they are now requiring minimum credit scores of 620 or higher for most FHA and VA loans. This comes as no surprise since most industry standards with investors have already moved in this direction. These new credit score requirements will not apply to borrowers who are applying for an FHA Streamline Refinance or VA Interest Rate Reduction.

Now please be aware that this is NOT an FHA or VA rule. FHA and VA loans in general are not credit score driven programs. However, due to higher default rates on these type of loans, the investor market who buys these loans put in certain stop gaps to get a better handle on marginal credit score borrowers and high default rates.

Mortgage Loan Programs for Credit Challenged Buyers

Every time I turn on the television or listen to the radio I hear another media talking head share with the public that banks are not making mortgage loans for buyers with credit scores less than 680, 720 or 740. Well I want to first set the record straight that this is not entirely true.

Now Let me make myself clear that “YES WE CAN” get you a mortgage if your credit score is lower than 680. There are conditions, but it is possible and I do it everyday for a lot of my clients.

Now that I set the record straight, let me explain this a little further.

First of all, it depends on where you go to get the home mortgage. Some of the bigger commercial banks and other financial institutions only sell a certain selection of mortgage products. Most of these mortgage products are all credit driven loan programs and are called conventional loans. So if you go to one of these banks or financial institutions for your home loan they might give you the same answer that you have been hearing on the radio or television. For example, I have a client that just came to me for help with a home loan. She originally went to her credit union to get the loan before speaking with me. This credit union told her that she had to put at least 5% down and she needed a credit score of at least 680 to secure the loan. Since she did not meet this criteria the credit union informed her that they could not provide the loan. What she was not told was that there are many alternative mortgage loan programs for buyers who do not have to put 5% down or require a 680 credit score.

So what are the mortgage loan options if your credit score is below 680?

The best mortgage programs for buyers who are credit challenged are ones in which the loan program is not entirely based on credit. Most government backed loan programs fit under these criteria such as FHA, VA and USDA loans. These programs are what I call “Guideline” loan programs. Under these types of loans you can expect less amounts required for down payment and credit scores as low as 580. Now the catch is you must meet the loan programs “Guideline”. Most of these programs require at least 2 years solid employment in the same line of work with the ability to prove that you can afford the payment. Having money saved up in your bank or retirement accounts always strengthen the file. Credit is used and most of these programs look at specific patterns on your credit. For example if 6 years ago you had a bankruptcy and have started to re-establish your credit, and your new history has been clean for the last 1-2 years, you will probably get approved on your credit profile. These types of loans are all reviewed by a human underwriter and sometimes things from your past can be explained with letters of explanation. Basically your file is reviewed on a case by case basis based on the program guidelines that are set up for each one of these government loans.

If you have further questions and would like to discuss your situation further, please feel free to just drop me an email or just call me.

On March 6, 2008 HUD announced a temporary FHA loan limit increase in counties across the United States. The Economic Stimulus Act of 2008 permitted FHA to insurance loans up to 125% of the area median house price.  These loan limits now run out on December 31, 2008.  After that date all FHA loan limits will revert back to the county limits based on median home price.  The impact on the homebuyer community is huge.  In some counties this could change the maximum loan limit by hundreds of thousands of dollars.  If you are looking to buy a home using FHA, please call me now to see if this is going to impact your new FHA mortgage loan. 

Attention Police Officers, Firefighters, Teachers and EMT’s. If you are in the market for a home you need to be aware of this specialized FHA loan program through HUD called the Good Neighbor Next Door Program. I am helping a couple of teachers right now with this loan and the outcome has been fantastic. Let me explain the mortgage loan details a little bit further. Basically if eligible for the program you can take advantage of an incentive to get into the home at a discount of 50% off the list price of the home. In return for the discount you commit to HUD that you will live in the home for 3 years as your primary residence.

Also you can use this program in conjunction with a 203K loan. Cherry Creek Mortgage Company has been doing these loans in conjunction with each other.

How the Program Works:

First of all the buyer must purchase the HUD home in a revitalization area. I always recommend getting your Real Estate Agent involved upfront and letting them know that you want to pursue these homes. Your agent can be a great guide with the HUD Homes available in your revitalization areas. You will also want to get your FHA mortgage pre-approved upfront before starting to look at these homes.

HUD does require that you sign a silent second for 50% of the value until you have fulfilled your 3 year occupancy requirement.

For further information, please feel free to contact me.