Click Here For PDF Version Full/Alternative Documentation 1-2 Unit 1 Unit 3-4 Unit PRIMARY RESIDENCE - PURCHASE & RATE/TERM REFINANCE Maximum Qualifying Ratios Required MI Minimum LTV CLTV Loan Amount Reserves Coverage Credit Score 3 95% 1 n/a $300,000 28/36 2 months 30% 660 Standard 90% 2 95% 3 $400,000 28/36 2 months 25% 620 Standard 90% 95% 3 $500,000 36/42 2 months 25% 700 Advantage 85% 2 95% 3 $400,000 28/36 2 months 12% 620 Standard 80% 2 95% 3 $500,000 28/36 2 months n/a 620 Standard 75% 90% 3 $650,000 33/38 2 months n/a 660 Standard 80% 80% $750,000 36/42 2 months n/a 700 Advantage 75% 75% $1,000,000 36/42 2 months n/a 700 Advantage 70% 80% $750,000 33/38 2 months n/a 660 Standard 65% 75% $1,500,000 33/38 2 months n/a 660 Standard 75% 75% $500,000 28/36 2 months n/a 620 Standard 65% 75% $650,000 33/38 2 months n/a 660 Standard 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. 3. All loans subject to subordinate financing with CLTVs between 80.01-90% require a minimum credit score of 660; all loans subject to subordinate financing with CLTVs between 90.01-95% require a minimum credit score of 680. LTV CLTV PRIMARY RESIDENCE - CASH-OUT REFINANCE 4 Loan Amount Cash-out Limit Qualifying Ratios Required Reserves MI Coverage Minimum Credit Score 1 Unit 90% 4 n/a $400,000 $50,000 28/36 3 months 25% 660 Advantage 85% 4 n/a $400,000 $50,000 28/36 3 months 12% 660 Advantage 80% 80% $400,000 $100,000 28/36 2 months n/a 660 Standard 1-2 Unit 75% 4 75% $500,000 $150,000 28/36 2 months n/a 660 Standard 65% 4 75% $650,000 $200,000 33/38 2 months n/a 660 Standard 1 Unit 60% 75% $1,500,000 $200,000 33/38 2 months n/a 660 Standard 4. Texas: cash-out refinances are not allowed above 80% LTV and are not allowed on 2-unit property. V. Descriptions 1 of 8 Document # 5408
SECOND/VACATION - PURCHASE, RATE/TERM REFINANCE & CASH-OUT REFINANCE Loan Cash-out Qualifying Required MI Minimum LTV CLTV Amount Limit Ratios Reserves Coverage Credit Score 1 Unit 90% 90% $400,000 $0 28/36 3 months 25% 660 Standard 85% 90% $400,000 $0 28/36 3 months 12% 660 Standard 80% 80% $500,000 $0 28/36 2 months n/a 660 Standard 75% 80% $650,000 $0 28/36 2 months n/a 660 Standard 80% 80% $750,000 $0 28/36 2 months n/a 700 Advantage 75% 75% $1,000,000 $0 28/36 2 months n/a 700 Advantage 65% 75% $1,500,000 $0 28/36 2 months n/a 660 Standard 65% 75% $650,000 $200,000 28/36 2 months n/a 660 Standard INVESTMENT PROPERTY - PURCHASE & RATE/TERM REFINANCE LTV CLTV Maximum Loan Qualifying Ratios Required Reserves MI Coverage # of Properties Minimum Credit Amount Financed 5 Score 1-2 Unit 75% 75% $500,000 28/36 6 months n/a 20 660 Advantage 1-4 Unit 70% 80% $500,000 28/36 6 months n/a See Note 6 620 Standard Cash-out not allowed on investment property 5. Flagstar Bank will lend against a maximum of four (4) properties to any one individual. 6. Refer to document# 6119 of Flagstar's Residential Underwriting Guidelines for Fannie Mae/Freddie Mac maximum property guidelines. No MI Option (Full/Alt Doc) PRIMARY RESIDENCE - PURCHASE & RATE/TERM REFINANCE LTV CLTV Maximum Loan Amount Qualifying Ratios Required Reserves MI Coverage Minimum Credit Score 1 Unit 90% 90% $500,000 33/38 6 months n/a 700 Advantage 1 Unit 7 No Condos 85% 85% $400,000 33/38 6 months n/a 660 Advantage 7. Condominiums are NOT ALLOWED under the 85% No MI Option. V. Descriptions 2 of 8 Document # 5408
No Income Verification 8 (NIV) 9 1 Unit 9 No Condos PRIMARY RESIDENCE - PURCHASE, RATE/TERM REFINANCE & CASH-OUT REFINANCE Maximum Cash-out Qualifying Required MI Minimum LTV CLTV Loan Limit Ratios Reserves Coverage Credit Amount Score 80% 80% $300,000 $0 28/36 6 months n/a 680 Advantage 75% 75% $500,000 $0 28/36 6 months n/a 660 Advantage 60% 60% $1,500,000 4 $0 28/36 6 months n/a 660 Advantage 65% 65% $300,000 $150,000 28/36 6 months n/a 660 Advantage 8. 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. 9. Condominiums are NOT ALLOWED under the No Income Verification option. TERM: SUMMARY: ELIGIBLE PROPERTY TYPES: INELIGIBLE PROPERTY TYPES: Fifteen (15) or thirty (30) years One (1) year adjustable rate mortgage with an initial fixed-rate period of three (3), five (5) or seven (7) years. No conversion option. 1- to 4-unit property (detached, semi-detached or attached) Condominiums (see CONDOMINIUM GUIDELINES section below) Planned Unit Developments (PUDs) Manufactured homes (double-wide only) 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. Reduced pre-sale requirement is available under the Advantage programs for primary residence purchase transactions on legal phases currently under construction or completed within the past twelve (12) months. Minimum 60% owner occupancy based on percentage of pre-sold units. A Condominium Owners Association must be in existence, but need not be in control of phase. All other Fannie Mae/Freddie Mac condominium guidelines apply. Not available for highrise 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 condominiums 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. Descriptions 3 of 8 Document # 5408
LOAN AMOUNTS: Minimum: Full/alt doc: $50,000; No Income Verification: $75,000 Maximum: $1,500,000 SELLER CONCESSIONS: Over 90% LTV: 3% 90% LTV and below: 6% REDUCED DOCUMENTATION ALLOWED BY AUTOMATED UNDERWRITING: Fannie Mae's Desktop Underwriter TM : Loans up to $500,000 which receive an Approve response from Desktop Underwriter TM may utilize the reduced documentation requirements that Desktop Underwriter TM allows. Flagstar Bank will not, however, waive the requirement for an appraisal, except as allowed under the STREAMLINED REFINANCE section below. Freddie Mac's 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 response from the Risk Grade Evaluation service offered through LP 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, except as allowed under the STREAMLINED REFINANCE section below. CREDIT SCORES: QUALIFYING RATIOS: Loans must conform to the minimum credit score requirement as listed on the appropriate eligibility grid 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 Loan Prospector or an Approve response from Desktop Underwriter TM need not meet the minimum credit score requirement Conforming loans submitted under an Advantage product and ALL Jumbo loans MUST meet the minimum credit score requirement. Loans must conform to the qualifying ratios listed on the appropriate eligibility grid above except: Conforming loans receiving a ratio waiver from Loan Prospector or Desktop Underwriter TM need not meet the ratio requirements; Jumbo loans submitted to the Risk Grade Evaluation system through Loan Prospector, and which receive an RG1 RG4 response, will be eligible provided the total monthly debt-to-income ratio does not exceed 50%. NON-OCCUPANT CO-BORROWERS USING BLENDED QUALIFYING RATIOS: We will now accept loans up to 90% LTV for 1-unit primary residence purchase and rate/term refinance transactions using blended occupant and non-occupant qualifying ratios. The occupying borrower will no longer be subject to individual qualifying ratios. Blended ratios must conform to those allowable under the QUALIFYING RATIOS section above. Loans using these blended ratio guidelines must exhibit a minimum credit score of 660, must be registered as an Advantage program, and must be eligible for mortgage insurance if the LTV exceeds 80%. LENDER FUNDED TEMPORARY BUYDOWNS: Not allowed V. Descriptions 4 of 8 Document # 5408
SUBORDINATE FINANCING: STREAMLINED REFINANCE: Permissible within the maximum LTV/CLTV parameters per the product grids: 80-10-10 and 80-15-5 with no mortgage insurance requirement are allowed for primary residences; see matrix for loan amount restrictions Clearly subordinate to the first mortgage Term not less than five (5) years unless fully amortizes in a shorter time May be fixed or adjustable rate; if adjustable, rate and payment may not change more than once every twelve (12) months; increases in rate may not exceed 1% per change No prepayment penalty or negative amortization Must provide for regular payments Payment must be included in monthly housing expense Equity lines of credit are eligible on primary residences only; entire line will be used to calculate ratios Seller financing is eligible Loans requiring mortgage insurance: MI must be through MGIC or Radian Guaranty Streamlined refinancing is allowed up to 90% LTV under Flagstar's Advantage program for primary residence transactions up to $500,000 per the following: Minimum credit score of 660; Conforming loans must receive an Accept response from Loan Prospector or an Approve response from Desktop Underwriter TM ; Jumbo loans must receive a Risk Grade of RG1 RG4; One (1) paystub with year-to-date income required for salaried borrowers; One (1) year's most recent tax returns required for self-employed and commissioned borrowers; No verification of assets; No need to explain large deposits, employment gaps or past derogatory credit; Cash back not to exceed the lesser of 1% of the loan amount or $1000; No mortgage lates in the last twelve (12) months; All liens to be paid off must be seasoned at least twelve (12) months; For properties purchased within the past five (5) years, original appraisal may be submitted with recertification of value, -or- new full appraisal. SWIMMING POOL ESCROWS: Properties with planned swimming pools not completed prior to closing are eligible for purchase with an escrow holdback of one-and-one-half (1 1/2) times the full estimated amount to complete the swimming pool. Work must be completed within sixty (60) days. ASSUMPTION POLICY: Allowed upon qualification of new mortgagor after the initial fixed rate period. V. Descriptions 5 of 8 Document # 5408
STATE ELIGIBILITY: All fifty (50) states Texas: 1-unit primary residence cash-out refinance transactions are eligible per the guidelines listed on this product description AND those listed on the Texas Homestead Cash-out Refinance product description (document# 5906 for Correspondents / document# 5907 for Brokers). Conforming loan amounts must receive either an Accept response from LP or an Approve response from DU. Jumbo loan amounts must receive a Risk Grade of RG1 RG4. Credit score and qualifying ratio guidelines will follow those listed on this product description. In the case of any conflicts between the two product descriptions, the more restrictive guidelines will apply. All loans up to and including $500,000 will be underwritten to Flagstar Bank's current Residential Underwriting Guidelines. The parameters listed on the following pages apply to loans above $500,000 ONLY, with the exception of the MORTGAGE INSURANCE, ADJUSTABLE RATE DETAILS and CLOSING DOCUMENTATION sections, which apply to all transactions. TRAILING CO-BORROWER: Trailing co-borrower income, averaged over the most recent two (2) year period, is eligible under the following guidelines: Corporate-sponsored relocation of non-trailing borrower Trailing co-borrower must verify two (2) year employment history Demand for co-borrower's occupation must be documented for new location (e.g. newspaper "want ads", letter from professional organization, etc.) Signed Letter of Intent to secure employment at new location One unit primary residence purchase not to exceed 90% LTV/CLTV Ratios may not exceed 28%/36% Percentage of trailing co-borrower income used in qualifying: LTV % of Trailing Co-Borrower Income 80.01-90% LTV 60% 70.01-80% LTV 70% 70.00% LTV or less 80% Six (6) months PITI in liquid reserves after closing Trailing income may not exceed 33% of total qualifying income Temporary interest rate buydowns are not allowed APPRAISAL REQUIREMENTS: Refer to Flagstar Bank Residential Underwriting Guidelines for standard appraisal requirements (document # 6121). Flagstar Bank will require two (2) appraisals for all loans over $650,000. The second appraisal must be ordered by the Broker/Correspondent from an appraiser selected by Flagstar. UNDERWRITING: All loans up to and including $500,000 will be underwritten to Flagstar Bank current Residential Underwriting Guidelines. All loans greater than $500,000 will be subject to Flagstar Bank current conventional conforming guidelines plus the following: 1. Must submit original and two (2) copy packages. Copy packages only will not be underwritten. 2. Full RMCR with three (3) credit scores -or- three (3) file merged credit report with credit scores from the three major credit reporting agencies. 3. Bankruptcies discharged at least 3 years with significant re-established credit. 4. Revolving debt cannot be paid off to qualify. V. Descriptions 6 of 8 Document # 5408
5. Reserves must be liquid (i.e. readily accessible within thirty (30) days). 6. If IRA or 401(k) accounts are used to cover reserve requirements, seventy percent (70%) of the vested portion is included in calculating the dollar amount of reserves. 7. Self-employed borrowers must have at least a two (2) year history of selfemployment, and must submit a completed Self-Employed Income Analysis Form (Fannie Mae Form # 1084A) along with all standard agency required documentation for self-employed borrowers. 8. Business funds may be used as funds to close or reserves and must be accompanied by a letter from an independent CPA stating the withdrawal of funds from the business will have no adverse affect. 9. Rental income - Copies of leases are acceptable for maximum of 2 rental units, 3 or more units requires 2 years tax returns. 10. Borrowers using bridge loan 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. 11. 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. 12. Refinances not allowed on properties listed for sale in the last 12 months. 13. Subordinate liens to be paid off must be seasoned at least twelve (12) months to be considered a rate/term refinance. 14. Value for properties purchased within the past twelve (12) months will be determined by lesser of acquisition cost plus cost of documented improvements or current appraised value. 15. Non-permanent resident aliens are eligible for 1 unit primary residences to 80% LTV for purchase and rate/term refinance transactions and 75% LTV for cash-out refinance transactions. Subordinate financing not allowed. Must have reasonable expectation to remain in the U.S. for three (3) years after closing. 16. No loans to partnerships, trusts or corporations. Title must be taken in the name of individual borrowers. MORTGAGE INSURANCE: If required, mortgage insurance must be obtained from a Flagstar-approved mortgage insurance carrier. ADJUSTABLE RATE DETAILS: Interest rate adjustment Caps: 3/1 ARM: 2% Initial / 2% Subsequent / 6% Lifetime 5/1 & 7/1 ARMs: 5% Initial / 2% Subsequent / 5% Lifetime Margin: Refer to daily rate sheet Interest rate Floor: The floor is equal to the Margin Index: Weekly average yield on U.S. Treasury securities adjusted to a constant maturity of one (1) year. Conversion option: None Negative amortization: None V. Descriptions 7 of 8 Document # 5408
CLOSING DOCUMENTATION: Closing documentation must include the following (Texas primary residence cash-out transactions see below): Fannie Mae/Freddie Mac Uniform Security Instrument, state-specific Fannie Mae/Freddie Mac Fixed/Adjustable Rate Note, Form # 3522 Fannie Mae/Freddie Mac Fixed/Adjustable Rate Rider, Form # 3182 W-9 and IRS 4506 for all Full/Alternative Documentation loans Standard title insurance commitment with all applicable endorsements Texas primary residence cash-out refinance transactions: All closing documentation and other requirements must be met as stated on the Texas Homestead Cash-out Refinance product description - doc# 5906 (Correspondents) or doc# 5907 (Brokers). Replace the fixed rate Texas Home Equity Note listed on the above product descriptions with the following two (2) Texas Home Equity ARM documents: Texas Home Equity Fixed/Adjustable Rate Note, Fannie/Freddie Form# 3522.44 Texas Home Equity Fixed/Adjustable Rate Rider, Fannie/Freddie Form# 3182.44 If applicable: Escrow Waiver Agreement 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 (2-4 unit property) Freddie Mac Second Home Rider, Form # 3890 V. Descriptions 8 of 8 Document # 5408