In the increasingly tight underwriting environment to get a mortgage loan in America, lenders are now (and have been for a while) pulling borrowers filed tax return transcripts to double verify the income submitted on the loan application matches what was filed on tax returns.  This is the case to qualify for any mortgage loan, both FHA loan or conventional.  Before your loan goes into underwriting, part of the initial disclosure documents you sign will be a document called a 4506T.  This document gives the lender permission to request a transcript of your tax returns.

Here are some things to watch out for.  If you are self-employed for example and need to count your 2009 income to qualify FHA loan, there is a delay from when you electronically file your returns with the IRS to when the transcripts will be available for a lender to pull.   This delay can be from 3-6 weeks.  This is important because if you are in contract to buy a property right now, and you need the lender to use your 2009 income to qualify and you just filed your returns, you loan approval could be delayed until the lender can pull that 2009 tax transcript.  So make sure you get your 2009 returns filed asap if you want to get FHA loan to buy a property in the next few months.

Additionally, something to be very careful with in light of lenders pulling tax transcripts for FHA loan approval is if you claim unreimbursed business expenses.  If you file a 2106 from with the IRS and claim unreimbursed business expenses these expenses have to be subtracted from your qualifying income.  You can be a salaried w-2 employee and claim these expenses if you have them.  When the lender pulls your tax transcripts, this will show up and could lower your qualifying income.

So now you know that lenders will pull your tax return transcripts as part of FHA home loan requirements, so make sure you are prepared. 

Below are some of the advantages of FHA loans:

• FHA loan down payment is only 3.5% down payment required and that 3.5% down can be a gift from a relative
• Maximum FHA loan amount is $729,750 in many parts of California such as Los Angeles, San Diego, San Jose, San Francisco, Orange County, etc…
• FHA loans qualifications allow for a 55% back debt-to-income ratio (conventional is 41% unless 20% down), allowing you to qualify for a larger loan amount than conventional loans
• FHA loan interest rates on 30 year fixed loans are still extremely low based on temporary Government stimulus
• FHA loan credit scores allowed are much more flexible than conventional

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

If you qualify FHA Loan, there is a good chance you will qualify for the special Homepath financing available on Fannie Mae owned properties.  We are able to handle Homepath Loans so feel free to call for any questions.

Now the Homepath Loan is only available on Fannie Mae owner properties.  These are properties where the borrowers had Fannie Mae owned loans and missed payments so they were foreclosed on and taken back by Fannie Mae.   There are a lot of them out there all around the state of California and nationally so you will see in the listing Homepath financing available on the property.  This means that this property qualifies for the special Homepath financing that we can handle for you.

Here are some highlights of Homepath financing:

• Minimum 3% down for owner occupants and 10% down for investors (although as an owner occupant you’ll want to put at least 5% down to get a better interest rate)
• No mortgage insurance
• No property appraisal required on Homepath properties
• No condo guidelines (Homepath does not care about the occupancy or any other issues with the condo that would prevent you from getting a FHA loan or standard conventional loan)
• Min credit score 660 (FHA is generally 620)

The interest rates on Homepath are slightly higher than a FHA loan.  But there is no mortgage insurance, so it may end up being pretty comparable to getting an FHA loan.  The credit score requirements and a little bit higher than FHA and the debt-to-income requirements are tighter than FHA.  You may be able to qualify for a higher purchase price with FHA.

So if you see a property that is advertising Homepath financing, make sure you call us.   Homepath properties are available in all prices ranges all over the state of California from San Francisco, San Jose, Los Angeles, Orange County, San Diego and everything in between.   There are Homepath properties that are expensive coastal homes, condo’s and inland starter homes.

And here are some general benefits of  FHA financing:

And here are some highlights to remember about FHA loans:

• To get a FHA loan credit score does not have to be perfect
• FHA loan interest  rates are at historic lows
• You can use gift funds for FHA loan down payment
• Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
• Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down 

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

As of February 1st, FHA has made some major changes to qualify FHA loan for a condo purchase.   Prior to Feb 1st, to get FHA a loan a condo, the condo complex  had to be on the FHA approved condo list, or if the condo was not on the FHA approved list you could apply for a FHA “spot” approval for a FHA loan on just that one unit.   Now as of February 1st, if the condo is not already on the FHA approved list, you have to get the entire condo project approved.   Also, every two years a condo will have to be RE-approved to stay on the FHA approved list.

There are basically two ways to get a condo on the FHA approved list and we can assist with both:

1. Have FHA itself approve the condo project

2. Work with a lender (such as us) to have the condo project approved for FHA loans

Getting the condo approved through FHA will take a minimum of 6 weeks and will require lot’s of documentation about the project.  Working with a lender can speed up the process considerably.

For a condo project to be approved for FHA loans and get on the FHA condo approved list, the condo project has to meet a checklist of requirements.  I won’t talk about the entire checklist here, but I will mention some of the major qualifications a condo will need to meet:

1. Owner Occupancy percentage requirements

51% or more of the units must have owners living in the unit as their primary residence.   This is generally information the condo HOA keeps on record.   Not meeting this occupancy requirement is the #1 reason condo’s fail to be FHA approved (and approved for conventional loans as well for that matter).

2. FHA loan concentration

Only 50% of the units in the project can have FHA loans on them.  There some exceptions to get up to 100% FHA loan concentration.

3. Number of Units Owned by one owner

No one entity can owner more than 10% of the condo units in the project. 

4. Percentage of Owners Late on HOA Dues

No more than 15% of the owners/units can be late on their HOA dues.  This is also a big one that disqualifies many projects.

So those are the top four areas that have to meet FHA specifications for a condo to be FHA approved.

Here are some of the benefits of using FHA financing:

• FHA loan interest rates on the 30 year fixed loans are still ridiculously low!
• Maximum FHA loans in many parts of California go up to $729,750. So you can get FHA loan on a condo in places like San Francisco, Los Angeles, San Diego and Orange County with 3.5% down up to a $729,750 FHA max loan amount
• FHA loan credit score does not have to perfect, but it does help if your score is 620 or above
• FHA loan down payment is only 3.5% and that can be a gift from a relative
• FHA loan approval is a lot easier than conventional loan approval.  You can have a lower credit score, higher back end debt-to-income ratio, and still get 30 years fixed rates as good as conventional loans!

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

homeloan8@gmail.com

FHA has announced few recent changes in the underwriting guidelines to qualify for a FHA loan and some changes with the FHA PMI (mortgage insurance).    

1. Starting April 2010, FHA will require borrowers with credit scores less than 580 to put 10% down to qualify for a FHA loan.  

This change will not have a major effect as there are not many FHA loans being approved with scores below 580 at this time anyway.  As long as your credit score is above 580, you can still have the minimum FHA loan down payment of 3.5%.   The best FHA loan interest rates and easiest/fastest loan process are for those FHA borrowers with credit scores of 620 or higher.  If your credit score is below 620, give me a call as I will go over your credit with you and give you analysis as to how you can quickly raise your credit score. 

2.  Starting April 2010 the FHA loan up front mortgage insurance (UFMI) will increase from 1.75% to 2.25%. 

This FHA mortgage insurance is paid to FHA to help insure FHA loans against default.   This change affects all FHA borrowers who put down the minimum 3.5%.  The FHA UFMI is rolled into the new loan balance so it is not paid out pocket (unless you elect to pay it out of pocket).  So for example on a $300,000 loan, the old FHA up front mortgage insurance would have been $5,250, making your new loan balance at close $305,250.    Starting April 2010, the FHA mortgage insurance on a $300,000 loan will be $6,750, making your loan balance at close $306,750.  Talk to your CPA at close at this entire up front mortgage insurance may be tax deductible for you.

3.  Starting April 2010, FHA will reduce the amount a seller can credit the buyer for closing costs in a FHA purchase loan to 3% from 6%.

Often when you purchase a property you can ask the seller to pay some or all of your closing costs.  Starting April 2010 the maximum the seller will be able to credit you is 3%.  The FHA is adding this rule to prevent sellers from inflating their prices so they can make large credits to buyers.

Some general highlights of FHA loans:

• FHA loans in California (certain counties) can go all the way up to $729,750
• FHA loan credit scores do not have to be perfect
• Conventional loan vs FHA…most conventional loans require 10% down and have much stricter credit score requirements and conventional loans require a 41% debt-to-income ratio with <20% down where FHA loans have a 56% debt-to-income ratio
• FHA loan interest rates are at historic lows STILL!
• You can still get a $8,000 tax credit from the IRS if you sign a contract to purchase by April 31st 2010
• FHA loan down payment is only 3.5% and ALL of that can be a gift from a relative

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

With current FHA loan guidelines, a borrower cannot qualify for a FHA loan unless that property has been owned by the seller for more than 90 days.  So if an investor buys a property and fixes it up, they have to wait until the 91st day after they took ownership to go into contract with a FHA buyer.   But now FHA has changed this rule and there is now no time limit a seller must have owned a property to qualify FHA loan.

This is a very good change for getting FHA loans in California and being able to get your purchase offer accepted.  Many sellers were choosing to accept purchase offers with conventional loan vs FHA because of this rule.   There are many investors in California that are purchasing properties at foreclosure trustee sales for cash and fixing them up to sell on the market.  This represents a lot of the inventory available in the market right now.   This rule change will help FHA borrowers be competitive against buyers making all cash offers and conventional loan offers.

This rule change takes affect February 1st 2010.  FHA still will have some rules around flipping properties such as:

• All transactions with seller owing less than 90 days must be arms-length.  No indentity of interest between buyer and seller or other parties participating in the transaction
• In cases where the sales price is 20% above the sellers original acquisition price and the seller purchased less than 90 days ago, the property must meet specific conditions

This rule change you help buyers out there be much more competitive to get an FHA home loan in California.

Some other great highlights of FHA loans in California below:

• Maximum FHA loan in many parts of California is $729,750
• FHA loan approval with up to 56% back end debt-to-income ratios (conventional loans with <20% down have a 41% max debt-to-income ratio)
• FHA loan interest rates fixed for 30 years STILL at historic lows
• FHA loan credit score does not have to be perfect
• FHA loan down payment is only 3.5% and that can be a gift from a relative (conventional minimum down is mostly 10% and you need a 720 credit score and 41% debt ratio)

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

Below are the maximum FHA loan amounts for the larger cities in California.   These are the highest loan amounts you could go to in purchasing a home with a FHA loan in California.  1 unit refers to a condo or single-family home, 2 unit refers to a duplex, 3 unit a triplex and 4 unit a fourplex.

• FHA loan San Francisco: 1 unit $729,750, 2 units $934,200, 3 units $1,129,250, 4 units $1,403,400
• FHA loan San Jose, Oakland, Fremont, Hayward: 1 unit $729,750, 2 units $934,200, 3 units $1,129,250, 4 units $1,403,400
• FHA loan Los Angeles: 1 unit $729,750, 2 units $934,200, 3 units $1,129,250, 4 units $1,403,400
• FHA loan Sacramento:  1 unit $580,000, 2 units $742,500, 3 units $897,500, 4 units $1,115,400
• FHA loan Santa Ana, Irvine, (Orange County): 1 unit $729,750, 2 units $934,200, 3 units $1,129,250, 4 units $1,403,400
• FHA loan Riverside, San Bernardino, Ontario: 1 unit $500,000, 2 units $640,100, 3 units $773,700, 4 units $961,550
• FHA loan San Diego:1 unit $697,500, 2 units $892,950, 3 units $1,079,350, 4 units $1,341,350
• FHA loan Fresno: 1 unit $381,250, 2 units $488,050, 3 units $589,950, 4 units $733,150
• FHA loan Santa Barbara: 1 unit $729,750, 2 units $934,200, 3 units $1,129,250, 4 units $1,403,400
• FHA loan Santa Cruz, Watsonville: 1 unit $729,750, 2 units $934,200, 3 units $1,129,250, 4 units $1,403,400
• FHA loan Redding: 1 unit $423,750, 2 units $542,450, 3 units $655,700, 4 units $814,900
• FHA loan Vallejo, Fairfield: 1 unit $557,500, 2 units $713,700, 3 units $862,700, 4 units $1,072,150
• FHA loan Santa Rosa: 1 unit $662,500, 2 units $848,100, 3 units $1,025,200, 4 units $1,274,050

So those are the maximum FHA loan for various cities in California.  If you don’t live in one of these area and would like to know the FHA max loan for your area, just give me a call or email.  Remember if you buy a 2, 3 or 4 unit property and occupy one of the units as your primary residence, you can use the rental income from the other units you don’t occupy as income to qualify.

And here are some highlights to remember about FHA loans:

• To get a FHA loan credit score does not have to be perfect
• FHA loan interest  rates are at historic lows
• You can use gift funds for FHA loan down payment
• Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
• Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down 

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

homeloan8@gmail.com

Many economists and prognosticators in the business world are predicting that FHA loan interest rates, as well as conventional loan (and all mortgage interest rates) could rise in 2010.  Prognosticators have been wrong so many times at predicting the direction of interest rates so you have to take what they say with a grain of salt. 

Most of the people in the business world predicting a rise of rates in 2010 are basing their argument that the Federal Reserve is going to stop purchasing Mortgage Backed Securities in March 2010.   The Fed has been buying billions in MBS over the last year in an effort to stimulate the U.S. economy.  The general thinking is the Fed has been artificially holding down 30 year fixed interest rates to artificially low levels around 5% and below 5% the past year.   If the private market has to step in and buy MBS after March 2010, many believe rates will have to rise in order to attract these investors.  How high they will need to rise is anyone’s guess.  Possibly to 5.5% or 6%, but no one really knows for sure.   And it’s not a given they will rise at all.  Depending on the direction of the economy, who knows the Fed could extend their buying program.    Much depends on the direction of the economy.  One thing is pretty much for sure though, if we get a lot of good news about the economy in 2010, the FHA loan interest rate on the 30 year fixed will rise.  Because not only will the Fed stop it’s purchasing program, speculation will start rising that the Fed will raise interest rates to keep inflation in check.  When the Fed raises the Federal Funds Rate, it generally causes 30 year fixed mortgage rates to rise. 

Here are some payments on a $300,000 FHA loan with different interest rates:

4.75% rate $300,000 loan=$1,564/mo

5.25% rate $300,000 loan=$1,656/mo

5.5% rate $300,000 loan=$1,703/mo

6% rate $300,000 loan=$1,798/mo

And here are some highlights to remember about FHA loans:

• To get a FHA loan credit score does not have to be perfect
• FHA loan interest  rates are at historic lows
• You can use gift funds for FHA loan down payment
• Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
• Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down 

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

For first time buyers or buyers in expensive areas like California that want to keep their housing payments down, buying a duplex with FHA financing is a really great way to go.    Many times a home buyer can buy a duplex, and after collecting the rent from the other unit, their total housing payment is less than if they would have bought a condo and certainly less than if they purchased a single-family home.  Additionally, if you want to eventually move out of the duplex to a single-family home, you can always keep the duplex as an excellent long term investment.   Or if you stay, over time the rents will rise on the other you unit you rent where your housing payment will stay fixed, so over time the rent from the other unit may pay your total housing payment and you live for free!  How is that for a retirement program!

FHA makes it very easy to qualify for a FHA loan on a duplex.  It’s is really a fantastic niche because you can get the same great FHA financing you can get on a condo or single-family home on a duplex:

• FHA loan down payment only 3.5% on a duplex, and all of that can be a gift from a relative
• The same historic low FHA loan interest rates can be had on a duplex with 30 year fixed rate loans
• FHA allows you to count 90% of the rental income from the other unit to help you qualify FHA loan on a duplex.  This extra income can help you qualify for a higher purchase price than a condo or single-family
• Maximum FHA loan in many parts of California for duplexes are higher than the maximum on condo’s or single-families…up to as high a $934,200 in many counties in California (and other states).  This allows you to buy a duplex in the best parts of Los Angeles, San Diego, San Jose, San Francisco, etc…
• FHA loan credit scores do not have to be perfect to buy a duplex
• Conventional loan vs FHA with buying duplex…you probably need 10% down payment with conventional and the qualifying credit and debt ratios are much more strict

So if you are in the market to buy a property, think about buying a duplex.

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

FHA announced major changes in its condo guidelines this summer, there were some negative changes such as the elimination of the FHA spot condo approval, which allowed for a single unit approval even though the entire condo project was not approved.  Although FHA has since extended spot condo approvals until Feb 2010.   Approval of condo complexes not currently on the FHA approved condo list will now have to be getting the entire project approved by either the lender or FHA.  The details on this process are still somewhat murky and not defined.  But some good news from FHA is that “site” condos no longer have to be approved by FHA in order to qualify for a FHA loan.

Site Condos are basically like single family detached properties yet fall under a condo style of ownership. Condo Project approval is not required for Site Condominiums; however, the Condominium Rider must be included in the FHA case binder submitted for insurance endorsement.

Site condos on their own lots in developments that have condo ownership and may have some common care covenants.  These condo’s can now be financed just like single family homes.  They do not have any of the hassles associated with getting a FHA loan on a regular condo.  

Regular condo’s that are not site condos and not on the FHA approved list have become very difficult to finance.  Conventional loans with less than 20% down can often require 70% of the units in condo projects to be occupied by owners among other onerous requirements.  Many of the condo’s being purchase in California are with 20% down or all cash, because they are not FHA approved and do not have the owner occupancy to qualify under the Mortgage Insurance guidelines for a less than 20% down conventional loan.

So in summary, make sure you check with me first if you are shopping for a condo in California.  I can check to see if it is on the FHA list if you are going with a FHA loan, I can check the occupancy if you are going with a conventional loan and I can also tell you if it’s a “site” condo.

And here are some highlights to remember about FHA loans:

• To get a FHA loan credit score does not have to be perfect
• FHA loan interest  rates are at historic lows
• You can use gift funds for FHA loan down payment
• Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
• Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down 

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

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Since the lending guidelines radically changed in 2008 it’s been more difficult for self-employed borrowers and independent contractors to get mortgage financing.  Prior to 2008 many borrowers with this type of income would get “no doc” home loans where they would not have to fully document their loans.  But in 2008 all the “no doc” loans went away and now self-employed borrowers, independent contractors and everyone not paid as a w-2 employee have to qualify based on their most recent two years of tax returns.

So to get FHA loan the first step will be to supply your last two years tax returns for qualification.   So if you are going to be buying in 2010, you will need your 2008 and 2009 federal tax returns all pages,  all schedules.  If you file K1’s or corporate returns you will also need to send those returns in.  For FHA loan approval for self-employed borrowers, the FHA underwriter will take the NET business income off your 2008 and 2009 federal tax returns and average the two years.  So if your NET in 2008 was $80,000 and your NET in 2009 was $90,000, the FHA loan underwriter will use $85,000 as your qualifying income.

It is very important to realize that it is the NET income that will be used for FHA loan approval, not your gross income.  Many self-employed people write off many expenses, so their gross may be high, but their NET may not be low.  This can be a challenge for many.  However, there are deductions that can be added back into your NET income to increase that figure.  We are a specialist at knowing the FHA guidelines and we are able to have many deductions added back into NET income helping self-employed borrowers.  Here is a list of deductions that can be added back to NET income:

• Business use of home
• Depreciation
• Loss carryover’s from previous years
• Mileage depreciation rate (40% of the total per mile auto expense rate)
• and more

Also, if you operate as a corporation and pay yourself W-2, we will still need to look at your last two year tax returns.  If the corporation is showing a loss, that loss amount may have to be deducted from the W-2 income you pay yourself.

The best thing to do if you are self-employed and want to qualify for a FHA loan (or conventional loan) is to call me and send me your federal tax returns so I can go over them in detail and let you know how much income we will be able to count. 

Here are some general highlights of FHA loans:

• Only 3.5% required for FHA loan down payment (vs. 10% down in most cases on conventional loans in California)
• Maximum FHA loan up to $729,750 in many counties of California and other expensive states
• FHA loan interest rates at historic lows (the U.S. Government is currently buying Mortgage backed securities at an unprecedented rate artificially holding down interest rates…this will not last that much longer)
• Seller can credit up to 6% of the purchase price for FHA loan closing costs
• FHA streamline refinance to lower rate options available once you have an FHA loan

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899