All Forum Posts by: Corey Blane

Hi @David Noskiewicz

There seems to be a TON of misinformation in this post and I want to clear this up for you.

The minimum FICO score is typically 620 (this can be lender specific as I've seen some go down to 600).

A VA loan, for a first time user of VA benefits, has an Upfront Funding Fee that's based on your down payment and looks like this:

0 Down: 2.15%

5%-10% Down: 1.50%

10%+: 1.25%.

The VA Funding Fee is added to your loan amount at closing (i.e. if you're buying a $200,000 home with no money down your final loan amount at closing would be $200,000 * .0215 = $4,300 + $200,000 = $204,300).

Your monthly payment will be based on the $204,300 final loan amount. 

There is no monthly Mortgage Insurance so when you figure your monthly payment it's just PITI (Principle, Interest, Taxes and Insurance).

The one big disadvantage of a VA loan is the inspection requirements can be brutal. Government loans (FHA, VA and USDA) are really meant for homeowners to purchase primary homes that are move in ready, not fixer uppers (outside of FHA 203k Renovation). Properties that having missing railings, broken windows or even chipping paint on the siding or any decks will be required to be repaired prior to closing. Those are just the most common items I see that need repairs for government loans.

VA does have very high limits for debt to income. I've been able to get VA loans approved up to 55% debt to income ratio (i.e. client makes $10,000/month and all debt with new PITI payment was $5,500/month). This is the most lenient you'll find.

You may also be interested in an FHA 203k Renovation loan if you feel the property will need repairs. The loan limits for multi family homes is quite a bit higher for 2-4 unit properties and an FHA loan allows for as little as 3.5% down payment.

The FHA 203k Renovation loan has a 1.750% Upfront Fee like VA (Just different names; one is called VA Funding Fee and the other is called Upfront Mortgage Insurance Premium). An FHA 203k Renovation loan does however have monthly mortgage insurance of .85% or .80% depending on your down payment (i.e. on a $200,000 loan at .85% you're looking at $141.66 in monthly mortgage insurance that will never go away unless you refinance the loan down the road).

The majority of the time the loan type will be determined by two factors: FICO score and available down payment.

I'm hoping this clears things up quite a bit for you. I know it can get confusing so if you have any questions send me a colleague request and message me. Even though I'm not licensed in CT I'm more than happy to help lead you in the right direction so you make the right decision.

Thanks. 

Hi @Mike Hoherchak

VA is probably one of the most lenient ways to finance a home purchase.

This morning I was able to get a Veteran approved who had a bunch of credit issues, foreclosure 4 years ago, overdraft fees in his bank account, negative bank balance, high debt ratios and a whole host of other challenges. The good news is he had a very solid explanation for why this was all happening which is what got him over the hurdle.

As you mentioned this is lender specific but 620 is the minimum FICO score required. 

The employment GAP isn't always an issue as long as you're now a W2 employee, can show 30 days of pay stubs (not self employed), and you can provide a letter of explanation stating the cause of the employment gap.

For a VA loan, in order to use the rental income from the other units you'll need:

1. Cash reserves totaling 6 months (principle, interest, taxes and insurance [PITI])

2. Documentation of applicants prior experience managing rental units or other background involving property maintenance. 

As for debt to income ratio I've gotten VA loans approved up to 55% (i.e. client makes $6,000/month and had total monthly debt payments (including the new mortgage PITI] of $3,250/month).

Let me know what other questions you have. I'm happy to help even though I'm not licensed in PA the underwriting guidelines are going to be basically the same from lender to lender. 

@Kyle Gray I'm licensed in CA so if you have questions about VA feel free to let me know and I'll answer them to the best of my ability.

Thanks!

Hi @Veronika Von

Are you looking for investors experience renting to students (are they messy, any additional clauses in rent agreement...etc)? 

Just clarifying what advice you're looking for. 

@Kevin O'Brien or if you find a lender that's good with 203(k) they might have suggestions as well.

Hi @Kevin O'Brien

Although I'm not licensed in either of those states I will say that I have a colleague who regularly closes 203(k) loans in 40-45 days which I don't think is unacceptable in most markets. 

The key for my colleague is working with a contractor who does these on a regular basis and knows the exact requirements. 

The cash flow question is harder to answer because I don't know all the details of the property. You can typically figure the monthly PMI by multiplying the final loan amount by .85 and then divide by 12 (i.e. $200,000 * .85 = $1,700 / 12 = $141.66/month).

Hope that helps.

@Robert Mason great to see you getting into the real estate game!

Are you a cash buyer or are you looking to finance your home purchase? 

If you're looking to finance the purchase feel free to ask me any questions about underwriting, down payment or income and asset requirements.

@Eli Sunderland FHA is a great product. It might be beneficial when you get to that stage to look at a 3% down conventional loan as well. If you're credit is good it's likely a better option because there is no upfront mortgage insurance premium like there is for an FHA loan. HomeReady also allows Boarder Income (roommates) if you need it to qualify.

The rates are slightly higher for HomeReady than FHA so it would be best that we run an analysis to see which is the better deal for your future plans with the property.

A few other differences: HomeReady has income limits, FHA does not. FHA has loan limits, HomeReady does not.

There are a lot of things to consider so whenever you want to simply talk ahead of time about options let me know. 

Hi @Eli Sunderland

Welcome to BP!

If you're looking for your first property it may be a good time to discuss your plan for financing. Are you a cash buyer or looking to finance the purchase? 

If you want to learn about all your options to secure financing for an investment property let me know, I'd love to help.

@Scott Swennes

As an agent you're probably well versed in mortgage financing options and finding solutions for your clients financing needs. If you're not I'd love to connect to see how I could help you and your clients.