Government loan programs

MyCommunityMortgage (MCM)

MyCommunityMortgage^TM is a flexible mortgage product for low- and moderate-income borrowers.

Key Features

• No minimum borrower contribution.
• Up to a 40-year term.
• Options for lower initial monthly payments with a 5-year or 10-year interest-only period.
• Funds for down payment and closing costs can come from a wide range of sources, such as a gift from a family member; a gift, grant or loan from a nonprofit organization, municipality or employer; or the borrower's own funds.
• Loan-to-value ratios permitted up to 97 percent for 1-unit properties.
• Extra flexibility on credit histories, including consideration of nontraditional credit histories.
• Extra flexibility on income sources including consideration of boarder income even if boarders are not related to the borrower.
• Cash reserves at closing not required in most cases.
• Part-time and overtime income is considered.
• Purchase a single-family home (including a condo or co-op), a two-, three-, or four-family home to live in one unit and rent out the others (minimum 3 percent borrower contribution for two- to four-unit properties).

The following options for MyCommunityMortgage may provide additional flexibilities for qualified borrowers:

• Community Solutions^TM for teachers, police, firefighters, and healthcare workers.
• Community HomeChoice^TM for borrowers with a disability or a family member with a disability.

Home Possible

• Fixed-Rate Mortgages (15, 20, 30 and 40-year)
• Adjustable-Rate Mortgages (5/1 (2/2/5), 7/1, and 10/1 CMT and LIBOR-indexed ARMs)
• No minimum down payment or homeownership education requirement for 1-unit Primary Residences
• Lower initial monthly payments with a temporary subsidy buydown plan
• No cash-out refinancing
• Closing costs paid by
  • Second lien
  • Grant from a local housing finance agency, nonprofit or employer
  • Gift from a related person
  • 3% property seller contribution

FHA loans

An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.

FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.

Some of the other benefits of FHA financing:

• Only a 3 percent down payment is required.
• Closing costs can be financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
• More flexible underwriting criteria than conventional loans
• FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
• Loans are assumable to qualified buyers.

VA Loans

VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.

Other benefits of a VA loan include:

• Negotiable interest rates.
• Closing costs are comparable and sometimes lower - than other financing types.
• No private mortgage insurance requirement.
• Right to prepay loan without penalties
• The Mortgage can be taken over (or assumed) by the buyer when a home is sold.
• Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.

Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.

A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.

Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.

Home Equity Conversion Mortgages (H.E.C.M.)

A HECM is also known as a "Reverse Mortgage".  This is a unique government program that allows senior homeowners 62 years old and over, access to the equity in their homes in the form of a lump sum, monthly payments or a line of credit similar to a HELOC.  With a HECM loan, you retain title to your home, no debt is ever passed on to your heirs and you can stay in your home as long as you live.