Lending update

Lenders are continually adjusting programs to strengthen their portfolios in light of the current economic situation.
We received unfortunate news last week that 100% financing is no longer available.  Following is summary of what is:

  1. 5% down based on the total cost to build, with 700+ credit score.*  Total Cost is what you paid for the land, soft/hard costs, lending fees, reserve funds.
  2. 5% down based on the project appraisal value, with 640+ credit score.*
  3. 5% down based on the cost of the land, 640+ credit score.*

Program availability is based on property location, and, if the property is located in a designated declining market an additional 5% down will be required.   If you have owned the land over 1 year, than any vested equity (difference between what you owe and what the land would appraise at) can apply towards the 5(10)% requirement.  Also, the funds can be gifted, or secured by home equity line (current home).    All programs require minimum two months reserves (this is two months of the projects calculated mortgage payment; the money only needs verified at the time of loan underwriting and serves to show the lender that you have funds to make the payment for two months in the event of losing income).

Jumbo loans (over $417000) fall under different parameters with 10-20% required down.

* Loan approval not guaranteed based on meeting credit score minimum requirement; all loan requests are run through lender’s underwriting computer system and must receive an ‘ACCEPT’ status.


1 Response to “Lending update”

  1. 1 Donald October 6, 2008 at 9:00 pm

    I was wondering about falling rates again. Contact me when you get a chance. I’ll discuss my situation with you. Hope you can help.

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