100% Financing, Mortgage Insurance, and Investment Property Update
There has been a tremendous amount of confusion over the past several months with Fannie Mae, Freddie Mac, and the mortgage insurance companies making sweeping changes regarding 100% financing. Since we have sort of stabilized for the time being, I wanted to give a quick overview of what is and is not still available.
A conventional loan with 100% financing on one mortgage is gone. The mortgage insurance companies will no longer insure any loans over a loan to value of 97%. We are one of the few lenders who can still do 100% financing on a conventional loan in the form of an 80/20 piggyback, however, this is limited to borrowers who have a credit score of 720 or higher. Additionally, the number of lenders who will do the first mortgage dwindles every day, and I expect that this program will also be down to a 97% maximum CLTV in the very near future.
The one bright spot in terms of 100% financing is on government loans. VA loans continue to be eligible for 100% financing, of course only those few borrowers with a VA Certificate of Eligibility are able to qualify for this loan. On FHA loans, the guidelines technically require a 3% down payment, but through downpayment assistance, we are able to get around this and do 100% financing in most cases - assuming the appraised value comes in high enough to support it.
Finally, on investment properties the majority of the mortgage insurance companies have given us a stay of execution on the proposed rule of no mortgage insurance on investment properties. Therefore, we can continue to do investment properties in Atlanta with an LTV of up to 90% for borrowers who have a minimum credit score of 680. However, we have inside information that indicates that on or around May 1st, many of the MI providers will eliminate mortgage insurance on investment properties nationwide. This could change, but I would not bet against this happening.
As it has been for the past several months, the key to navigating this ever-changing market is to be sure that you are working with a mortgage professional who is staying on top of all of these changes and watching out for your interests.