Home Buyer 97% Home Loans and Mortgages
Community Home Buyer (CHB) 97 is a conventional fixed
rate home loan that is designed to assist first time
home buyers with flexible mortgage qualifying terms.
The loan is a fixed rate mortgage in which the monthly
payments remain the same over the life of the loan.
Once the mortgage is in effect, the interest rate does
not fluctuate but remains constant.
30 year fixed rate loan is one of the most commonly
used mortgages for residential financing in America.
The greatest advantage for a home buyer is the predictability
of the payments each month because it never changes.
This type of loan is often recommended for home buyers
living on a fixed income, a set budget, or those planning
on living in their home for more than five years. If
interest rates increase, the loan rate will remain the
same. Unfortunately should rates decline below the set
interest rate on the loan, the only way to change it
is to refinance the mortgage and incur a loss of equity
or additional closing costs to take advantage of the
lower interest rate.
major difference between the CHB 97 and other conventional
home loans is the reserve requirement. The CHB 97 only
requires a 1 month cash reserve. Also, the CHB 97 limits
the borrower's income to 100% of the median income for
following are highlights of this loan program:
Payment Requirements: The minimum down payment required
for this type of loan is 3% of the sales price for owner-occupied
and employment: The borrower's income is limited
to 100% of the median income for the area. As for employment,
there are no limitations on a specific length of time
at a particular job. However, a 2 year history is required,
preferably in the same line of work (education can be
counted towards this 2 year history if it is for the
same profession the borrower is currently in).
properties and occupancy requirements: Single family
attached and detached homes, 2 to 4 unit properties,
planned urban developments (PUDs), and Fannie Mae or
Freddie Mac approved condominiums. Second homes and
investment properties are not eligible under this program.
Costs: Closing costs and prepaids may be paid by
interested parties (i.e. seller) as long as they are
considered in the contribution limitation. For primary
residences, the seller may contribute up to 3% of the
sales price if the buyer is putting less than 10% down.
If the buyer is putting 10% or more down, the seller
may contribute up to 6% of the closings costs.
This type of loan is not assumable.
Penalty: Not applicable.
Reserves: The borrower is required to have a minimum
of one month cash reserves in the bank by the close
Funds: Gifts are allowed from a relative, church,
municipaility, or a non-profit organization.
Scoring: Generally Fannie Mae and Freddie Mac require
a minimum credit score of 620.
(Non-Occupant Co-Borrowers): Not allowed.
Ratios: Fannie Mae and Freddie Mac limit a borrower's
monthly payment not to exceed 28% of their gross monthly
income. A borrower's total debt (proposed monthly payment
plus monthly payments towards credit cards, student
loans, car payments, and other installment and revolving
credit) cannot exceed 36% of their gross monthly income.
If compensating factors are present or if the borrower
has an above average credit score, the stated ratios
may be exceeded.
Insurance: Required for all purchases with a down
payment less than 20% of the purchase price.