Review and Update on Lending Programs

Erick Mariscal

Review and Update on Lending Programs with Residential Loan Mortgage Originator  Richard Alvarado

Always review your options for the lending process with a loan originator. This post is a summary of the current need to know basics of a loan to buy a house.

Information provided by Richard Alvarado from Sun West Mortgage Company, Inc. We will cover the list of documents you need to get the Loan Approval started and go over traditional loans, non-traditional, and loan assistance programs. Each option is available depending on the loan scenario.

Traditional Loans:

Conventional Loans – Credit requirement is a 620+ credit score with a loan limit of $484,350.  Down payment percentages vary.

  • Great News to D. A. C. A. recipients, you can now qualify for this loan as well, only few lending companies can offer this. To qualify you need few more things than a citizen.
    • 620+  ESTABLISHED credit score. Which means that it has to be with a history of 24+ months or less if the credit is a strong score.
    • Copy of the Passport or D. A. C. A. ID
    • Recipient cannot qualify for down payment assistance programs since they are federal programs for citizens.
    • D. A. C. A. requires renewals and the time frame for a loan to be accepted before expiration will be verified soon. Stay tuned with us on future post.
    • Recipients used to also be available for a FHA loan but not anymore.

FHA and VA Loans – Credit requirement is a 500+ credit score with a loan limit of $331,200 in the Harris County area.

  • Even though the minimum score needed is 500 it does not mean that it will be automatically be approved, there is a lot more that goes into underwriting.
    • Loan has to be for a Primary Residence which means you can qualify it is your only or first house.
      • non primary residences are like second homes or investment properties.
      • second properties have to me with a 50 mile radius apart to be considered for an investment loan
  • Down payments can vary depending on the credit score.
    • Credit score between 500 – 579 requires a mandatory 10% down payment
    • Scores of 580 and above require up to 3.5% down payment.
  • VA loans remain as a 0% down payment no matter what even if the score is of the minimum 500.

Review and Update on Non-Traditional Loans/ Non-QM Programs:

There are a couple options you can qualify for if a non-traditional program is the path for you.

  • Self Employment Program.
    • Uses 20 -24 month of bank statements to be able to process
    • Takes 20% – 30% down payment depending on the income.
    • This program has high interest rate because it does not require tax return verification
    • Interest rate will not exceed 10%
  • Program for people with an INT (non-DACA recipients/ temporary residency)
    • Credit requirement of 660+ and above.
    • Must have established credit which is a credit history of over 24 months or less if it is strong credit history.
    • Takes 15% – 20% down payment.
    • Interest rate does not exceed 10%
  • Investor’s Program
    • Also called the no ratio program
    • It does not require tax return verification
    • Underwriting uses the market analysis based on the price of that home.
    • Requires 20% – 30% down payment
    • Interest rates range from 8.5% -9.5%

Review and Update on the 5 Star Programs for Closing Cost Assistance :

This programs can help by providing the client with help to cover part of the closing costs.

Individually a person cannot make more than $74K, otherwise they will not qualify for any of the assistance programs.

  • SETH Program.
    • South East Texas Housing program.
    • Credit requirement of 640+ for conventional loans, and 660+ credit score for FHA and VA loans
    • 0.5 – 0.75 interest rate
    • Up to 5% for Conventional loans and up to 4%  cap assistance for FHA and VA loans.
    • Does not to be paid back, only the interest rate.
    • Website http://sethfc.com/
  • TDHCA program.
    • Texas Department of Housing  and Community Affairs program.
    • Credit requirement of 640+ for conventional loans, and 660+ credit score for FHA and VA loans
    • 0.5 – 0.75 interest rate
    • Up to 5% for Conventional loans and up to 4%  cap assistance for FHA and VA loans.
    • Does need to be paid back at some point. Pay off or resale for pay back.
    • Website https://www.tdhca.state.tx.us/
  • For N.A.C.A  recipients there is no assistance programs.
  • TSHAC program is Coming Soon.
    • Texas State Affordable Housing Corporation program.
    • Requires a credit score of 620+ for FHA and VA loans.
    • Does not require to be paid back, only the interest.
    • Up to 5% for Conventional loans and up to 4%  cap assistance for FHA and VA loans.
    • Website https://www.tsahc.org/
  • SETH Gold Star program Coming Soon.
    • South East Texas Housing Gold Star program.
    • Up tp 7%  cap assistance
  • Realtors qualify for a program as well.
    • Realtors can qualify by using their bank statements
    • Requires using their IDs, regular documents, and maybe also a letter from theor CPA
    • Requires to put 10% – 15% down payment
    • 7% – 8% interest rate.
    • This loan will not affect the use for the business funds. Let the lender tell them and explain how it works. For everything actually this post is just to have a well rounded base on knowledge.
  • Fix and Flip Program Coming Soon.
    • Allows you to close on an LLC account.
  • One Time Close Program for builders Coming Soon.
    • For homes from the ground up only
    • If already in the construction process the project needs to a conventional loan instead.

Side Notes:

  • For Investors:
    • Ask them how long they have owned the property.
    • There is a Flip Rule they must follow in order to qualify for a loan.
    • For FHA and VA it takes 90 + days to be eligible for a loan on an investment home.
    • For Conventional Loans there is no rule
  • Clients have a 15 day window to shop around with different up 3 different lenders maximum without affecting their credit score.

Extra Information:

Marketing Tools available for us to use.

  • Total Expert – pre made templates for flyers and more.
  • List Reports – pre made templates for site assistance, property flyers, and more.
  • Ask Richard to get access that is linked to the mortgage company that pays for the service.
  • Or you can have it paid on your own.

We hope you find this review and update useful and that the tips we provided bring you as much success as we have had when it comes to being knowledgeable of the lending process for your clients. Think we missed something? Please let us know your thoughts or any other tips we might have missed in the comments. Above all, to your growth and success.

The Team at City Insight Houston.

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