HomeReady FNMA Standard 97% Description Program DU Eligibility Huron Valley Financial product offering for Fannie Mae 97% is three products offered: 97% Fannie Mae Home Ready Fannie Mae Standard 97% Fannie Mae Standard 97% Refinance loan currently owned by Fannie Mae Fixed Rate Only - 30-year term DU Approve Eligible, special feature code 900 present on DU findings for Home Ready and special feature code 127 present on DU findings for FNMA Standard 97% Purchase LTV range CLTV range CLTV max Refinance 95.00-97% DU approval only If the subordinate lien is NOT a Community Second 105% if the subordinate lien is an eligible Community Second Home Ready Refi max is 95% LTV. LTV >95-97% follows FNMA standard 97% guides: o Loan must currently be owned by Fannie Mae (use look up tool) o FNMA Streamline 1003 verify Fannie Mae as owner of existing mortgage Excessive value red flag will be considered on a case by case basis. Property and Occupancy First Time Home Buyer Income Limits 1 Unit Owner Occupied. o All borrowers must occupy. o Non-occupant co-borrower allowed to max 95% LTV. No Manufactured homes or 2-4 unit Fannie Mae eligible condo or PUD No First-Time Home Buyer Requirement No income limits in low income census tracts 100% of AMI (area median income) in high minority census tracts or designated disaster areas 80% of AMI in other tracts Income Eligibility HomeReady Income eligibility lookup Note: DU will automatically apply the correct property census tract search and AMI figure to compare against the annual income figure input in encompass to determine if eligible. It will fire ineligible when it is exceeded. At least one borrower must be a firsttime home buyer. This is defined as not having any ownership in a property in the last 3 years One borrower must answer declaration M as no for property ownership in the past 3 years. No income limit requirements Page 1 of 5
Ratios 45% max DTI Per DU Non-Borrower Household income Can be used as a compensating factor on DU loans only Not to be added to borrower s income. (Is not considered qualifying income for income limits) Will not be included in the ratios. Add as other income and choose Nonborrower from the drop-down. Non-borrower income must be at least 30 percent of the total monthly qualifying income being used by the borrower(s). (Note: Income from more than one nonborrower household member may be considered.) Non-borrower household members may be relatives or non-relatives, including a spouse who is not on the loan. Can only be used when DTI is >45% and < 50%. NA The non-borrower must 1) document his or her income, and 2) sign a statement of intent to reside with the borrower(s) for a minimum of 12 months. (See optional Fannie Mae Form 1019.) Ownership of Other Property No restriction on borrower s ownership in other residential property at time of closing Borrower may sell a current home the same day as purchasing the new home and would remain eligible No restriction on borrower s ownership in other residential property at time of closing At least one borrower must be a firsttime home buyer with no property ownership in the past 3 years. Non-occupant borrowers Non-occupant borrowers are permitted to max 95% LTV. Their income is considered as part of the blended qualifying income and for income limits test. Max DTI 43% for occupying Borrower. No limitation on ownership of other owned property for the non-occupant borrower. Non-occupant borrowers are permitted for all loans to max 95% LTV. No limitation on ownership of other property for non-occupant borrower. Page 2 of 5
Home-Buyer Education and Counseling At least one borrower must complete an acceptable pre-purchase home-buyer education and counseling program in accordance with Fannie Mae prior to note date Must be provided through Framework Homeownership LLC at a current cost of $75. Counseling thru HUD approved Down Payment Assistance Program providers. Only if down payment is from a Community Seconds mortgage. Certificate must be retained in loan file. Not Required Post Purchase Counseling Post-purchase early delinquency counseling must be available for any delinquency that occurs during the seven years following the date on which the mortgage is originated. It is no longer required to have disclosure signed at closing. Not Required Encompass Data Entry Fannie Mae Streamline 1003 screen, under Mornet Plus Community Lending, check Community Lending box. Under Fannie Mae s Community Lending Product, select 08, Home Ready from the dropdown. No Additional Steps. One of the borrowers must have answered no to declaration M of owning a home in the past 36 months. Loan Decisions Pricing Under pricing options, check boxes AU Decision as DU Approve, Home Ready. The items above do not transfer from Encompass to Loan Decisions. Under pricing options, check boxes AU Decision as DU Approve, First Time Buyer. The items above do not transfer from Encompass to Loan Decisions. Minimum Borrower Contribution None Required. All funds can come from eligible gifts. Page 3 of 5
Mortgage Insurance Coverage Reserves 25% 35% Reserves requirements will be determined by DU. Reserves may come from eligible gifts. Underwriting HVF Overlays DU Approve Eligible Traditional credit only. No manual underwriting No cash on hand No Sweat Equity No boarder income No 2-4 unit properties or manufactured housing Work Completion Escrows Contributions by Interested Parties Buy Downs Escrow Waiver Not allowed 3% Not offered Not allowed UPDATE RECORD TRACKING Page 4 of 5
3-30-2017 Sue Conklin Created on Date: 3-30-2017 The LTV for purchase transactions was updated to reflect LTV s from 95-97% are allowed. Page 5 of 5