2. A1 – Percentage of Applicable LTV  This figure comes from the applicable LTV charts Maximum Purchase LTV Factors Owner Occupant95% - 1 unit > 660 Score 75% - 1 unit > 700 Score Florida Condo 85% - 2 unit > 660 Score 75% - 3-4 unit > 660 Score Second Home90% - 1 unit > 680 Score 70% - 1 unit > 720 Score Florida Condo Investment 85% - 1 unit > 680 Score (No FL Condo) 75% - 1 unit > 680 Score ( Refinance) & (No FL Condo)

3. A2 – Percentage of Renovation Permitted Based on Estimated “As Completed” Value (not >50%) Fannie Mae limits the amount of improvements to 50% of the as-completed appraised value. This is in order to ensure that the property is not being over improved for its area. A3 – This section marks whether this is a Primary Residence, Secondary Residence or Investment Property.

4. B1- Sales Price (Purchase) The contract sales price should be used on this line. B2- First Mortgage Pay-Off and Eligible Liens (Refinance) This is the existing payoff balance and should be completed on all refinance transactions. B3 – Estimated “As Completed” Value (after improvements) This value will come from the appraisal. The appraisal should represent the appraiser’s estimate of the property’s value after completing the proposed rehabilitation.

5. C1a – Hard Costs (Labor/Materials) This represents the total “hard costs” of the renovations based on signed and accepted estimate(s). C1b – Contingency Reserve (if financed) The contingency reserve will protect the borrower from any unforeseen problems or cost overruns. The funds that are set aside in the contingency reserve can be used for any additional improvements once the rehabilitation is complete. The required amount is 10% of line C1a and cannot be waived. A higher percentage may be allowed as an exception, if acceptably justified by the lender, based on information provided by the contractor.

6. C1b – Contingency Reserve - continued The contingency reserve can be paid in cash or financed. If paid in cash, enter a 0 on this line. If being financed, enter the actual amount of contingency. If paid in cash, any unused funds will be returned to the borrower. If financed, any unused funds will be applied to the principal balance at the final release. C1c – Architect/Engineer Fees If there is going to be a structural modification to either the interior or the exterior of the property, then the borrower may finance the fees charged by an architect to do the necessary drawings of the plans.

7. C1d – Consultant Fees If a consultant is used, the fee charged can be financed into the loan amount. The fee is whatever is reasonable and customary and the consultant may be an FHA Consultant, licensed Home Inspector, Architect or other professional third party who evaluates the project and reviews documentation for accuracy and state and local code compliance.

8. C1e – Inspection Fees The number of inspections allowed on a project will depend on the scope of the work. To calculate, multiple the anticipated number of inspections by the inspection fee charged by the appraiser or consultant. C1f – Title Update Fees The title update is to ensure that the mortgage remains in first position on the title. The amount, frequency and cost of the updates will vary greatly from lender to lender due to the state specific requirements. The lender should therefore complete this line based on local requirements.

9. C1g – Permits Building permits may be financed. All permits must be in place prior to the first release. C1h – Payment Reserve (Months not occupied x Monthly Payment) – Not to exceed 6 months The borrower is permitted to finance in the escrow account up to 6 months of mortgage payments. This is allowed ONLY when the property is vacant and the work is not completed. This is ONLY allowed on primary residences. Be sure to include the full PITI payment.

10. C1i – Other (Draw Management Fee) Any fees necessary to complete the rehabilitation can be financed (i.e. final appraisal, draw management fee, any soft costs that can be attributed to the renovation). The draw management fee is calculated as 1.50% of the portion of the mortgage allocated to the rehabilitation (C1a through C1h) or $500, whichever is greater.

11. C2 – Total Alterations, Improvements and Repairs (Total of C1a to C1i) Add lines C1a through C1i. This is the total rehabilitation costs and allowable fees to be financed. This is a good place to check that the total costs aren’t exceeding 50% of the As-Completed Value.

12. D1 – Total of Purchase Price and Improvement Cost (B1+C2) D2 – Estimated “As Completed” Value (B3) D3 – Total of Financed Private Mortgage Insurance (E7) D4 – Purchase Mortgage Loan Amount ((Lesser of D1 or D2) x A1) D5 – Refinance Mortgage Amount (B3 x A1)

13. All States & DC (except AK & HI)AK and HI One Family $417,000$625,500 Two Family $533,850$800,775 Three Family $645,300$967,950 Four Family $801,950 $1,202,925

14. Purchase Refinance E1 – Purchase Price (B1) N/A E2 – Alterations, Improvements and Repairs (C2) E3 – Land (if acquired separately) N/A N/A E4 – Refinance (include debts to be paid off) N/A E5 – Estimated Prepaid Items E6 – Estimated Closing Costs E7 – PMI, MIP, or Funding Fee N/A E8 – Discount (if Borrower will pay) E9 – Total Costs (Total of E1 to E8) E10 – Subordinate Financing

15. Purchase Refinance E11 – Borrower Closing Costs paid by Seller N/A E12 – Other Credits E13a – Loan Amount (D4 or D5) E13b – Base Mortgage (D4 or D5) E14 – Total Funds Available to Borrower (E10 + E11 + E12 + (E13a or E13b)) E15 – Cash (from Borrower) Only if (E9 – (E10 + E11 + E12 + (E13a or E13b)) > 0)

16.  Purchase Price is $200,000  After Improved Value is $250,000  Estimate of repairs $25,000  LTV Factor 95%  10% Contingency reserve will be required  Two inspections at $125 a piece  One title update $75  The consultant fee $400  Building Permit will cost $100  Seller Concession 3%  Estimated Closing Costs $4,500  Estimated Pre-paids $2,000  Earnest Money Deposit $1,000

17.  Existing Debt $250,000  After Improved Value is $450,000  Estimate of repairs $115,000  LTV Factor 95%  10% Contingency reserve will be required  Five inspections at $125 a piece  One title update $125  The consultant fee $1,000  Building Permit will cost $250  Estimated Closing Costs $7,500  Estimated Pre-paids $3,500