Get in the FAST LANE with WesLend Wholesale! FHA Program Overview

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1 FHA Program Overview

2 Program Eligibility Owner Occupied, Primary Residences only % Maximum LTV for Purchases % Maximum LTV for Rate & Term Refinances % Maximum LTV for Cash Out Refinances.

3 Program Eligibility 640 Minimum FICO Score for standard balance loans. 660 Minimum FICO Score for high balance loans. 15 year fixed, 30 year fixed, 3/1 ARMs and 5/1 ARM terms available.

4 FHA Loan Limits The maximum loan amount varies depending upon the location of the property. For standard balance loans, the maximum loan amount is the lesser of $417,000, or the HUD maximum loan amount for the particular county where the property is located. For high balance loans, the maximum loan amount is county specific. A current, county specific, loan amount matrix can be located on FHA s website.

5 Mortgage Insurance Premiums Mortgage Insurance Premiums Loan Term LTV Up Front MIP Annual MIP > 15 Years 95% > 95% 1.75% 1.75% 1.20% % 1 78% 1.75% None 15 Years 78.01% 90% 1.75% 0.35% 1 > 90% 1.75% 0.60% 1 1 Add an additional 0.25% to the Annual MIP for Loan Amounts > $625,500.

6 Mortgage Insurance Premiums The Up Front MIP may be financed into the loan amount. When doing this, the total loan amount may exceed the maximum LTV, and the maximum county loan limit, by the amount of the MIP. The Annual MIP is divided into 12 payments, and is paid monthly by the borrower, similar to standard MI on a conventional loan.

7 Qualifying The Maximum DTI is determined by the AUS. (Maximum 45%/55% DTI for Streamline Refinances) Paying off revolving debt to qualify is allowed, as long as the account is also closed. The funds needed to pay off the debt must be sourced and verified.

8 Credit Requirements Borrowers must have a minimum of 3 trade lines. 2 must have been open for 24 months and the other open for at least 12 months. Authorized user accounts cannot be used as a trade line unless borrowers can provide 12 months bank statements, and/or canceled checks, showing that they have been making the payments.

9 Derogatory Credit Bankruptcies must be discharged for a minimum of 24 months. Foreclosures must be seasoned for a minimum of 3 years. Tax Liens do not have to be paid at closing, as long as the borrower has been in a payment plan for a minimum of 6 months, and are paid as agreed. Judgments must always be paid off at closing.

10 Assets/Cash Reserves Reserves are determined by the AUS, with a minimum of 3 months reserves being required on 3 4 unit properties. 2 months bank statements are required, with all pages. The borrower is required to source any deposits other than payroll. VODs are not allowed. If any assets will be backed out because the borrower is not able to source funds, they must provide a letter of explanation stating what the funds are for.

11 Are FICO scores required? Frequently Asked Questions Yes, FICO scores are required on all loans. Are FICO scores required for the Co Borrower, if the Primary Borrower has a qualifying FICO score? Yes, all borrowers must have a qualifying FICO score. On Streamlines, can a borrower skip a payment? No, HUD does not allow borrowers to skip payments.

12 Frequently Asked Questions If a borrower had a Chapter 7 BK, which included a mortgage, and is now 2 years from BK, does it have to be 3 years from the Foreclosure date too? Yes, it must meet both guidelines 2 years from BK and 3 years from Trustee s Deed. Are we able to do High Balance Streamline refinances? No. High Balance Streamlines are not longer eligible.

13 Frequently Asked Questions If a Non Occupant Co Borrower does not have a social security number, can we move forward with the purchase transaction? Yes. However, you must obtain credit for the borrower under name and address, and/or tin#, however this requires a manual downgrade for AU and will be subject to all manual underwriting guidelines. On an FHA Streamline, where the property is a condo, does the condo have to be FHA approved? Yes, unless it s a Wells Fargo to Wells Fargo transaction.

14 Frequently Asked Questions Can we take an appraisal from another lender? Yes. However, if corrections are needed, and the appraiser is not willing to make them, we may need to order our own appraisal. Can we go up to 96.50% LTV on 4 Unit properties? Yes, as long as it is an Arms Length transaction. On a Wells to Wells Streamline, do we still have to income qualify? No. However, we will still need a VVOE and current pay stubs.

15 Frequently Asked Questions If a borrower got a pay raise 6 months ago, can we use YTD or current salary to qualify? Yes, but only if the borrower is Salaried. A written VOE is required, and it must reflect the date of last increase. Do we need 2 paystubs and 2 months bank statements for an FHA Streamline transaction? Yes. There are no exceptions to this.

16 Credit for Non Purchasing Spouse. Common Suspense Items DU not released to WesLend. Incomplete Income Documentation, such as: Self employed and only 1 year of tax returns provided, 3 rd party verification for self employed borrowers, Borrower using overtime, or bonus, income to qualify no written VOE with income breakdown provided. Credit report submitted with file does not match the one uploaded in DU. Undisclosed properties reflected on tax returns and not on the Undisclosed debt reflected on credit report and not on the Condo not FHA/VA approved. Non married borrowers listed on the same application and credit report. (Non married borrowers must be on separate 1003s and have separate credit reports)

17 Questions

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