FHA/VA Government-Insured Loans [Mike Mulgrew] [May 2010]

Trivia Question What percentage of homebuyers used FHA/VA government-insured loans in 2009? 47%

Trivia Question What percentage of first-time homebuyers used FHA/VA government-insured loans in 2009? 63%

What FHA is Federal Housing Administration within HUD Insures loans that meet certain criteria Prime program with prime rates Introduced in 1934 as a secure, accessible housing option

FHA has been an option for First-time homebuyers Buyers with little/no cash for down payment Buyers with limited/no traditional credit Buyers with past credit challenges that have been rectified Buyers who need non-occupant co-borrower assistance Buyers wanting flexible income/debt/credit requirements

FHA is attractive due to… Low down payments Cash reserves not required on 1-2 unit properties No restrictions on amount of income Credit allowances are more lenient Non-traditional credit allowed

FHA offers great opportunities… …for buyers. Low cash requirements for borrowers Low margin options Fully assumable to qualified buyers Temporary higher loan limits

How FHA benefits YOU More buyers may qualify Can help close the sale – Seller contribution allowed Can help drive more business – Temporary interest rate buy downs Can help move more inventory – Streamline 203k for fixer-uppers

What VA is… US Department of Veterans Affairs Created to make housing available for veterans Loans not limited to military bases Loans are available in all 50 states and District of Columbia

Trivia Question How many people are eligible for VA financing? 70 million.

VA determines eligibility The following may be eligible: Active duty personnel with qualifying service Personnel with previous qualifying military service Reservists, National Guard and Coast Guard personnel with qualifying service Unmarried surviving spouse of a veteran killed as a result of service-related activities Honorably discharged personnel Public Health Service Officers, cadets/midshipmen in the Army, Navy, Air Force and Coast Guard academy may also be eligible (final determination is made by the VA)

VA financing features Loan amounts up to $1,500,000* Up to 100% loan-to-value Single qualifying ratio of 41% No prepayment penalty Non-traditional credit may be acceptable Fully assumable to qualified buyers VA funding fee required

VA product options Long-term fixed rate terms Temporary or permanent interest rate buy down options (can be paid by buyer and/or seller): 3/2/1 2/1 1/1

Eligible properties Single-family primary residences (attached and detached) 2-4 unit properties VA-approved condos Planned Unit Developments (PUDs) Manufactured housing New construction from VA-approved builders

Requirement Property MUST be owner-occupied In some cases, spouse can fulfill occupancy requirement

I can help your qualified clients Obtain their official Certificate of Eligibility (COE) from the VA, stating what their entitlement is Obtain a PriorityBuyer ® preapproval that tells you how much home they can finance

Programs Home Opportunities SM For first-time and low-to-moderate income homebuyers Accommodates constraints regarding: Down payment Income and credit requirements Source of funds

Programs Special Programs Administration (SPA) Administers Community Assistance Programs (CAP) available in certain communities Includes the following programs: Mortgage Revenue Bonds (MRBs) Down Payment Assistance Programs (DAPs) Mortgage Credit Certificates (MCCs) Section 8 Housing Choice Voucher (HCV)

Programs Community Development Mortgage Program Low-to-moderate income borrowers and borrowers purchasing in low-to-moderate income tracts Features include: Long-term fixed rate terms Low down payments LTV up to 98% Homebuyer education No mortgage insurance Eligibility up to 80% median family income

QUESTIONS?

Tools Mortgage Product Guide Materials pertaining to our specific FHA/VA products

FHA Sweat Equity Buyers with appropriate skills perform predetermined tasks during the construction process Labor can be credited toward down payment

This information is for real estate professionals only and is not intended for distribution to consumers. Insert your company’s specific disclosure statement here. # /10