Full/Alternative Documentation PRIMARY RESIDENCE - PURCHASE & RATE/TERM REFINANCE Property Type Max. LTV Max. CLTV

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1 Click here for PDF version Full/Alternative Documentation PRIMARY RESIDENCE - PURCHASE & RATE/TERM REFINANCE Maximum Loan Credit Score 3 Program 1- to 2-unit 95% 1 n/a $300,000 28/36 2 months 660 Standard 90% 2 95% 3 $400,000 28/36 2 months 620 Standard 90% 95% 3 $500,000 36/42 2 months 700 Advantage 80% 2 95% 3 $500,000 28/36 2 months 620 Standard 75% 90% 3 $650,000 33/38 2 months 660 Standard 1-unit 80% 80% $750,000 36/42 2 months 700 Advantage 75% 75% $1,000,000 36/42 2 months 700 Advantage PRIMARY RESIDENCE - CASH-OUT REFINANCE 4 Max. Loan Cash-out Limit Credit Score Program 1-unit 90% 4 n/a $400,000 $50,000 28/36 3 months 660 Advantage 80% 80% $400,000 $100,000 28/36 2 months 660 Standard 1- to 2-unit 75% 4 75% $500,000 $150,000 28/36 2 months 660 Standard 65% 4 75% $650,000 $200,000 33/38 2 months 660 Standard 1-unit 60% 75% $1,500,000 $200,000 33/38 2 months 660 Standard SECOND/VACATION - PURCHASE, RATE/TERM REFINANCE & CASH-OUT REFINANCE Max. Loan Cash-out Limit Credit Score Program 1-unit 90% 90% $400,000 $0 28/36 3 months 660 Standard 80% 80% $500,000 $0 28/36 2 months 660 Standard 75% 80% $650,000 $0 28/36 2 months 660 Standard 80% 80% $750,000 $0 28/36 2 months 700 Advantage 75% 75% $1,000,000 $0 28/36 2 months 700 Advantage 65% 75% $1,500,000 $0 28/36 2 months 660 Standard 65% 75% $650,000 $200,000 28/36 2 months 660 Standard INVESTMENT PROPERTY - PURCHASE & RATE/TERM REFINANCE 5 Maximum Loan Credit Score Program 1- to 2-unit 75% 75% $500,000 28/36 6 months 660 Advantage Cash-out not allowed on investment property 1. All LTVs over 90.00% are subject to a minimum credit score of 660 and must receive an Accept response from Freddie Mac's Loan Prospector, or an Approve from Fannie Mae's Desktop Underwriter (conforming loans), or an RG1 RG4 response from the Risk Grade Evaluation system (jumbo loans). 2. Eligible for streamlined refinance with minimum 660 credit score, register as an Advantage loan (see STREAMLINED REFINANCE section below). 3. All loans subject to subordinate financing with CLTVs between % require a minimum credit score of 660; all loans subject to subordinate financing with CLTVs between % require a minimum credit score of Texas: primary residence cash-out refinances are not allowed. 5. Borrower may not own more than twenty (20) properties which are financed. No MI Option (Full/Alt Doc) PRIMARY RESIDENCE - PURCHASE & RATE/TERM REFINANCE Maximum Loan Credit Score Program 1 Unit 6 No Condos 85% 85% $400,000 33/38 6 months 660 Advantage 6. Condominiums are NOT ALLOWED under the 85% No MI Option. V. Product Descriptions 1 of 6 Document# 5414

2 No Income Verification 7 (NIV) PRIMARY RESIDENCE - PURCHASE, RATE/TERM REFINANCE & CASH-OUT REFINANCE Type 8 Max. LTV Max. CLTV Maximum Loan Cash-out Limit Credit Score Program 1-unit 8 80% 80% $300,000 $0 28/36 6 months 680 Advantage No Condos 75% 75% $500,000 $0 28/36 6 months 660 Advantage 60% 60% $1,500,000 4 $0 28/36 6 months 660 Advantage 65% 65% $300,000 $150,000 28/36 6 months 660 Advantage 7. No Income Verification loans are available for self-employed and commissioned borrowers only. Conforming loans must receive an Accept response from Freddie Mac's Loan Prospector or an Approve response from Fannie Mae's Desktop Underwriter. Jumbo loans must receive an RG1 RG4 response from the Risk Grade Evaluation system. 8. Condominiums are NOT ALLOWED under the No Income Verification option. SUMMARY: TERM: Fixed-/adjustable-rate, conventional conforming or non-conforming first lien mortgage loan program with interest-only payments during the fixed-rate period: first five (5) years for 5/1 ARMs, or first seven (7) years for 7/1 ARMs. At the end of the fixed-rate period, the loan converts to a one-year adjustable rate mortgage with full principal and interest payments for the remaining term. Thirty (30) years first 5 or 7 years allow for interest-only payments ELIGIBLE PROPERTY TYPES: 1- & 2-unit property (detached, semi-detached or attached) Condominiums (see CONDOMINIUM GUIDELINES below) Planned Unit Developments (PUDs) Manufactured homes (double-wide only) INELIGIBLE PROPERTY TYPES: Manufactured homes (single-wide) CONDOMINIUM GUIDELINES: Must meet Fannie Mae/Freddie Mac guidelines Development must have a minimum of ten (10) units High-rise condominiums (buildings with more than eight (8) floors) are eligible in the following cities ONLY: New York, Chicago, Los Angeles, San Francisco, Houston and Dallas. Pre-sale requirement lowered for Advantage primary residence purchases in legal phases under construction or completed within past 12 months. 60% owner occupancy based on percentage of pre-sold units. An Owners Association must be in existence, but need not be in control of phase. All other agency condominium guidelines apply. Not available for high-rise condos, or in the following states: Alaska, Connecticut, District of Columbia, Hawaii, New Jersey, New York or Pennsylvania. Pre-sale requirement lowered to: Apartment-style condominiums, and townhouse-style condos in buildings of more than five (5) units: 40% Detached condominiums, and townhouse-style condominiums in buildings of up to five (5) units: 25% V. Product Descriptions 2 of 6 Document# 5414

3 LOAN AMOUNTS: : Full/alt doc: $50,000 No Income Verification: $75,000 Maximum: $1,500,000 INTERESTED PARTY CONTRIBUTIONS: Interested party contributions include funds contributed by the property seller, builder, real estate agent/broker, mortgage lender, or any other party with an interest in the real estate transaction. Over 90% LTV: 3% 90% LTV and below: 6% TEMPORARY BUYDOWNS: Not allowed SUBORDINATE FINANCING: Permissible within the maximum LTV/CLTV parameters: and with no mortgage insurance requirement are allowed for primary residences; see matrix for loan amount restrictions Must conform to standard Fannie Mae/Freddie Mac subordinate financing guidelines, with the exception that for equity lines of credit (eligible on primary residences only) the entire line will be used to calculate CLTV and qualifying ratios Seller financing is eligible Loans w/mi: MI must be from MGIC or Radian Guaranty CREDIT SCORES: QUALIFYING RATIOS: Credit scores must meet the applicable minimum score listed on the eligibility grids above except: Conforming loans submitted under one of the Standard Delayed ARM products (not Advantage loans or Jumbo loans) which receive an Accept response from LP or an Approve response from DU need not meet the minimum credit score requirement Conforming loans submitted under an Advantage product and ALL Jumbo loans MUST meet minimum credit score requirement. must meet the guidelines listed on the eligibility grids above except: Conforming loans receiving a ratio waiver from Loan Prospector or Desktop Underwriter need not meet the ratio requirements; Jumbo loans submitted to the Risk Grade Evaluation system through LP or DU, and which receive an RG1 RG4 response, will be eligible provided the total monthly debt-to-income ratio does not exceed 50%. REDUCED DOCUMENTATION ALLOWED BY AUTOMATED UNDERWRITING: Desktop Underwriter: Loans up to $500,000 which receive an Approve response from Desktop Underwriter may utilize the reduced documentation requirements that DU allows. Flagstar Bank will not, however, waive the requirement for an appraisal. V. Product Descriptions 3 of 6 Document# 5414

4 Loan Prospector: Loans up to conforming loan limits which receive an Accept response from Loan Prospector may utilize the reduced documentation requirements that LP allows. Loans above conforming loan limits which receive an RG1 RG4 Risk Grade may utilize Standard Accept documentation (Streamlined Accept or Accept Plus documentation will not be accepted), regardless of the documentation class stated on the Feedback Certificate. Flagstar Bank will not, however, waive the requirement for an appraisal. STREAMLINED REFINANCE: Streamlined refinancing allowed to 90% LTV under Flagstar's Advantage program for primary residence transactions up to $500,000: credit score of 660 and no mortgage lates in last 12 months; Conforming loans must receive an Accept/Approve response from LP/DU; Jumbo loans must receive a Risk Grade of RG1 RG4; Current paystub with year-to-date income required for salaried borrowers; Most recent 1040s required for self-employed/commissioned borrowers; No need to explain employment gaps or past derogatory credit; Cash back not to exceed the lesser of 1% of the loan amount or $1000; All liens to be paid off must be seasoned at least 12 months; For properties purchased within the past 5 years, original appraisal may be submitted with recertification of value, -or- new full appraisal. TRAILING CO-BORROWER INCOME: Loans up to $500,000: follow standard Fannie Mae/Freddie Mac guidelines. Loans over $500,000: up to 50% of trailing co-borrower s income, averaged over the past 2 years, may be used to qualify under the following guidelines: Corporate-sponsored relocation of non-trailing borrower Trailing co-borrower must verify 2 year employment history Co-borrower's occupation must be readily marketable in new location Signed Letter of Intent to secure employment at new location One-unit primary residence purchase not to exceed 90% LTV/CLTV may not exceed 28%/36% Six (6) months PITI in liquid reserves after closing Trailing income may not exceed 33% of total qualifying income APPRAISAL REQUIREMENTS: Loans up to $500,000: follow DU/LP feedback (appraisal waivers, however, are not allowed). Loans $500,001 - $650,000: standard full agency appraisal, or Fannie Mae/Freddie Mac Form 2055 with interior and exterior inspection. Loans over $650,000: Flagstar Bank will require two (2) full appraisals. The second appraisal must be ordered by the Broker/Correspondent from an appraisal firm selected by Flagstar; contact your underwriter. V. Product Descriptions 4 of 6 Document# 5414

5 UNDERWRITING: All loans up to $500,000 underwritten to Fannie Mae/Freddie Mac guidelines. All loans greater than $500,000 will be underwritten to the following: 1. All borrowers used to qualify must have at least two (2) credit scores. 2. Bankruptcies must have been discharged at least three (3) years with significant re-established credit. 3. Revolving debt cannot be paid off to qualify. 4. must be liquid (i.e. readily accessible within thirty (30) days) % of vested IRA/401(k) accounts may be used for reserves. 6. Self-employed borrowers must have at least a 2 year history of selfemployment in the same line of work. 7. Business funds may be used as funds to close or reserves if accompanied by a letter from an independent CPA stating the withdrawal of funds from the business will have no adverse affect. 8. Borrowers using bridge financing must qualify with payments on new home, current home and bridge. Payment on current home may be excluded if property is subject to a fully executed purchase agreement. 9. Rental income - copies of leases are acceptable for maximum of 2 rental units, 3 or more units requires 2 years tax returns. 10. If borrower will be leasing current primary residence, entire mortgage payment must be included in debts. Payment may only be offset with a lease if borrower has a landlord history as evidenced on tax returns. 11. Value for properties purchased within past 12 months determined by lesser of acquisition plus documented improvements, or current appraisal. 12. Refinances not allowed on properties listed for sale in last 12 months. 13. Non-permanent resident aliens eligible for 1-unit primary residences to 80% LTV for purchases and rate/term refinances and 75% LTV for cash-out refinances. Subordinate financing not allowed. Must have reasonable expectation to remain in the U.S. for 3 years after closing. 14. No loans to partnerships, trusts or corporations. Title must be taken in the name of individual borrowers. MORTGAGE INSURANCE: All loans above 80% LTV require mortgage insurance coverage according to the following guidelines: LTV coverage % 30% % 25% % 12% New York properties: for purposes of determining whether or not mortgage insurance will be required, use the loan-to-value ratio that results from dividing the loan amount by the appraised value of the property. If the loan-to-value resulting from this method is greater than 80%, then use the standard method of determining loan-to-value (based on the LESSER of sales price or appraised value) to determine the required MI coverage level. V. Product Descriptions 5 of 6 Document# 5414

6 STATE ELIGIBILITY: Program is available in all fifty (50) states with the following restrictions: Texas: cash-out refinances are not allowed under this product (Correspondents: see doc# 5906 / Brokers: see doc# 5907) New York: refer to MORTGAGE INSURANCE section above for mortgage insurance coverage calculation requirements. ADJUSTABLE RATE DETAILS: Interest rate adjustment caps Margin Index 5/1 & 7/1 ARMs: 5% Initial / 2% Subsequent / 5% Lifetime Interest rate floor See rate sheet 1-Year CMT Margin is the floor Change dates 5/1 ARM: 60 th payment due date; every 12 months thereafter 7/1 ARM: 84 th payment due date; every 12 months thereafter Conversion option Assumption Negative amortization None Subject to conditions, fees and rate adjustment V. Product Descriptions 6 of 6 Document# 5414 None ARM Disclosures 5/1 ARM: Document# /1 ARM: Document# 3408 CLOSING DOCUMENTATION: Flagstar has coordinated with the following approved document providers to ensure that proper TIL calculations are used and that proper forms are included in closing packages ordered from these companies. Because of the custom note and rider, no other companies may currently be used. We will be expanding this list frequently as more doc prep firms are brought on line with this product. Online Mortgage Documents (OMD) Document Processing Systems (DPS) All loans: Fannie Mae/Freddie Mac Uniform Security Instrument, state-specific Multistate Fixed/Adjustable Rate Note With Interest-Only Period, Form# 5414N Multistate Fixed/Adjustable Rate Rider With Interest-Only Period, Form# 5414R Standard title commitment with all applicable endorsements, including the variable-rate endorsement (Endorsement 6.1) If applicable: Fannie Mae/Freddie Mac Condominium Rider, Form# 3140 Fannie Mae/Freddie Mac PUD Rider, Form# 3150 Fannie Mae/Freddie Mac 1-4 Family Rider, Form# 3170 (for 2- to 4- unit primary residences and all investment property mortgages) Freddie Mac Second Home Rider, Form# 3890