January 3, 2023

Happy New Year, and let’s make 2023 a great year!

Over the long weekend, I had a chance to look over some of the things we did for clients in 2022, and I hope they appreciate me! LOL! I will take the next few weeks and discuss loan programs so we all have a better understanding walking into 2023, which is a year where knowledge will prevail!

Today we will start with FHA vs. Conventional  -
Conventional Loans have a minimum 3% down payment up to a $726,200.00 Loan Amount for first-time buyers! You can do 5% down in Los Angeles County on Loan Amounts up to $1,089,300.00, and you do not have to be a 1st-time buyer for Conventional Loans. With 3% down, a 45% Debt to income ratio is usually the max. With 5% down, we see some go up to 50.49%, but don’t count on that! Credit scores can be as low as 620, but you may have an issue getting a loan to close with 3% down and a 620 credit score for multiple reasons. The interest rate and PMI rate varies depending on the buyer’s credit score, and impounds are required with less than 10% down. There is no pre-payment penalty on these loans. PMI can be removed from these loans like any conventional loan. Generally, if a buyer has a score of 720 or more, a conventional loan with a low down is a better deal for them from the start vs. FHA. If the score is below that, then the rate and PMI usually push the payments higher than an FHA payment. You need a full condo review on Condos when a buyer puts less than 10% down.

FHA Loans are great for buyers with lower scores. A buyer can do 3.5% down in LA county on loan amounts up to $1,089,300.00. The rate hits are better when credit scores are lower, and their PMI stays the same no matter what their credit score is.

PMI is only removable if a buyer puts down over 10%, and the PMI goes away when the buyer pays down the mortgage to 78% of the original purchase price. PMI is higher on loan amounts above $625,500.00 so be careful when a lender doesn’t know this as that means that they don’t know too much, as this has been in effect for 6-7 years now. FHA requires approval on all condo projects that are attached. If a condo unit is detached from an attached condo project, you do not need FHA approval. You can get a Single Unit Condo approval if a condo is not approved. There are quite a few requirements on this, and I can get you those, but that is our job! LOL! If FHA has ever rejected a project, it would not be eligible for Single unit approval! Yes, we also call the single unit approval Spot approval because I am old, and that is what they used to call them! You will have PMI on an FHA Loan even if you put 25% down! FHA allows a 46.99% front-end Debt to income ratio and 56.99% on the back end. FHA allows you to refinance without an appraisal or equity!

Interest rates are a tad better today! Happy New Year, one good day in a row is a trend!

• Government Loans (FHA / VA) is in the 5’s.
• Conventional Loans up to $726,200.00 - in the high 5’s, and low 6’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the high 5’s and low to mid 6’s
• Jumbo loans above $1,089,300 are in the low 6’s
• 5/1, 7/1, 10/1 Arms are in the 5’s
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the 8’s.
• 0 down loans are in the high 7’s to low 8’s- 620 credit score min right now! Mid 6’s, for the most part, up to $725,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.49% with limited fees – But they get you where you need to go!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all week if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!