Ohio
97% Home Loans
Community
Home Buyer 97% Home Loans and Mortgages
The 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.
The 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.
The 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 the area.
The following
are highlights of this loan program:
Down Payment
Requirements: The minimum down payment required for this type
of loan is 3% of the sales price for owner-occupied properties
only.
Income
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).
Eligible
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.
Closing
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.
Assumability:
This type of loan is not assumable.
Pre-payment
Penalty: Not applicable.
Cash Reserves:
The borrower is required to have a minimum of one month cash reserves
in the bank by the close of escrow.
Gift Funds:
Gifts are allowed from a relative, church, municipaility, or a
non-profit organization.
Credit
Scoring: Generally Fannie Mae and Freddie Mac require a minimum
credit score of 620.
Co-Signers
(Non-Occupant Co-Borrowers): Not allowed.
Qualifying
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.
Mortgage
Insurance: Required for all purchases with a down payment
less than 20% of the purchase price.