Basic Information Needed To Pre-qualify a Buyer

• Full name, including middle initial, Jr., etc*.
• Social Security Number.*
• Residence address for at least the past 2 years.*
• Employment information for at least the past 2 years.
• Current gross income of all borrowers.
• Estimate of funds available for a down payment and the source.
• All current monthly debt payments, child support, union dues.
• Comments on borrower's credit history. Any slow pays, collections, judgments, bankruptcy, or foreclosure? Possible sources of alternative credit history for borrowers who have little to no traditional credit established?

* This information is needed in order to obtain an "in-file" credit report.

Below are the financing programs:

1. Conventional

• Credit evaluation weighted heavily on credit scores. No specific minimum, but 640 is considered a good rule of thumb. There can be a previous bankruptcy, but it will usually take several years for the scores to recover sufficiently.

• Debt to income ratio is 36%, but good scores allow for a LOT higher ratios!

• While there are programs that require less down, 5% is the minimum a borrower can put down without getting into interest rate adjustments and or extra fees.

• Borrowers can receive gift funds for their down payment, but the first 5% must be documented as their own money, unless they are putting 20% down or more. There also must have at least 2 months PITI in reserves, unless they are putting at least 20% down.

• Job stability is important, but somewhat subjective. Okay for recent job changes if in the same field. It is helpful if it was for advancement.

For commissioned jobs or other performance-based compensation, they typically need to be on their current job a minimum of 2 years. The same is true for self-employed buyers.

2. FHA

Credit history, particularly within the past 2 years, are more important than the scores themselves. Okay to have a bankruptcy, as long as it was discharged at least 2 years prior. Okay to have a foreclosure as long as it was at least 3 years prior. Re-established credit should be problem-free since the bankruptcy/foreclosure.

• Debt to income ratios are 29% and 41%, however higher ratios will work if the buyer has strong credit scores.

• FHA only requires a 3% investment in the transaction. The down payment can actually be less, but the down payment PLUS buyer-paid closing costs must equal at least 3%.

• Buyers can receive a gift from an acceptable source for their down payment, closing costs, and pre-paid items. Acceptable sources are determined based upon the financing, call you lender or bank today for more details!

• Employment requirements and income calculation methods are similar to conventional guidelines.

3. VA

Call your local bank, or call our office so that we may make a professional recommendation for financing.

5. Non-Conforming