97% Home Loans
Home Buyer 97% Home Loans and Mortgages
Community Home Buyer (CHB) 97 is a conventional fixed
rate home loan that is designed to assist first time home
buyers with flexible mortgage qualifying terms. The loan
is a fixed rate mortgage in which the monthly payments
remain the same over the life of the loan. Once the mortgage
is in effect, the interest rate does not fluctuate but
30 year fixed rate loan is one of the most commonly used
mortgages for residential financing in America. The greatest
advantage for a home buyer is the predictability of the
payments each month because it never changes. This type
of loan is often recommended for home buyers living on
a fixed income, a set budget, or those planning on living
in their home for more than five years. If interest rates
increase, the loan rate will remain the same. Unfortunately
should rates decline below the set interest rate on the
loan, the only way to change it is to refinance the mortgage
and incur a loss of equity or additional closing costs
to take advantage of the lower interest rate.
major difference between the CHB 97 and other conventional
home loans is the reserve requirement. The CHB 97 only
requires a 1 month cash reserve. Also, the CHB 97 limits
the borrower's income to 100% of the median income for
97% Home Loans
The following are highlights of this loan program:
Payment Requirements: The minimum down payment required
for this type of loan is 3% of the sales price for owner-occupied
and employment: The borrower's income is limited to
100% of the median income for the area. As for employment,
there are no limitations on a specific length of time
at a particular job. However, a 2 year history is required,
preferably in the same line of work (education can be
counted towards this 2 year history if it is for the same
profession the borrower is currently in).
properties and occupancy requirements: Single family
attached and detached homes, 2 to 4 unit properties, planned
urban developments (PUDs), and Fannie Mae or Freddie Mac
approved condominiums. Second homes and investment properties
are not eligible under this program.
Costs: Closing costs and prepaid's may be paid by interested
parties (i.e. seller) as long as they are considered in
the contribution limitation. For primary residences, the
seller may contribute up to 3% of the sales price if the
buyer is putting less than 10% down. If the buyer is putting
10% or more down, the seller may contribute up to 6% of
the closings costs.
This type of loan is not assumable.
Penalties: Not applicable.
Reserves: The borrower is required to have a minimum
of one month cash reserves in the bank by the close of
Funds: Gifts are allowed from a relative, church,
municipality, or a non-profit organization.
Scoring: Generally Fannie Mae and Freddie Mac require
a minimum credit score of 620.
(Non-Occupant Co-Borrowers): Not allowed.
Ratios: Fannie Mae and Freddie Mac limit a borrower's
monthly payment not to exceed 28% of their gross monthly
income. A borrower's total debt (proposed monthly payment
plus monthly payments towards credit cards, student loans,
car payments, and other installment and revolving credit)
cannot exceed 36% of their gross monthly income. If compensating
factors are present or if the borrower has an above average
credit score, the stated ratios may be exceeded.
Insurance: Required for all purchases with a down
payment less than 20% of the purchase price.