how it all began

Prior to The Great Depression:

-Land Contracts

-B&L’s (Building & Loan Association)

-40%-50% Down

-12 Year or Less Repayments

-Minimal Mortgage Companies

-No Government Involvement

-High Risk

how it all began

The Great Depression (1930):

-Unemployment led to widespread foreclosures

-Mortgage system ground to a hault

-Federal government became involved

-Homeowner’s Loan Corporation established 15 year loan

-FHA (Federal Housing Administration) was created

-FHA Loans were born....

fha loans

-Created in 1934 as part of the National Housing Act

-Issued by a commercial lender

-Insured by the Federal Housing Administration in the event of default

-Banks/Lenders allow for more favorable terms because the loan is insured

-Lower down payment and credit score requirements

-Two insurance premiums required

-Must personally occupy the property (exceptions apply)

FHA LOAN

Ins Requirements

Ins Cancellation

**Water test required when well is on a new construction, property has been vacant for 90+ days, appraiser reports deficiencies and within certain property locations.

Va loans

-Created in 1944 as part of the Serviceman’s Readjustment Act

-Issued by a commercial lender (in most cases) and insured by the VA

in the event of default

-Certificate of Eligibility required

-No down payment required

-No mortgage insurance required

-Must personally occupy the home

VA LOAN

Ins Requirements

Fees

**Termite Inspection must be paid for by Seller.

USDa loans

-Created in 1937 as part of the New Deal efforts after The Great Depression

-Issued by a commercial lender and insured by USDA

-Targeted towards low-moderate income households

-No down payment required

-Must personally occupy the property

-Must be in a USDA area

USDA Eligibility Map

USDA LOAN

Ins Requirements

Fees

conventional loans

-A Conventional Loan is any loan not backed by the federal government

-Fannie Mae and Freddie Mac set minimum loan requirements but lenders

set their criteria.

-Less than 20% down requires PMI (Private Mortgage Insurance)

-Less than 20% down is considered an Insured Conventional Loan

CONVENTIONAL LOAN

Ins Requirements

Fees

-A Conventional Loan is any loan not backed by the federal government

-Fannie Mae and Freddie Mac set minimum loan requirements but lenders

set their criteria.

-Less than 20% down requires PMI (Private Mortgage Insurance)

-Less than 20% down is considered an Insured Conventional Loan

DOWN PAYMENT ASSISTANCE PROGRAMS

The Indiana Housing and Community Development Authority has the following programs for down payment assistance:

FIRST PLACE PROGRAM

NEXT HOME PROGRAM

FIRST PLACE PROGRAM

• Down Payment Assistance (DPA) of 6.0%
  
• Based on the purchase price
  
• Not to exceed the appraised value
  
• Must be a first-time homebuyer, unless:
  
• The subject property is located in a qualified census tract or targeted areas
  
• FHA or Conventional 30-year fixed-rate loan
  
• Minimum FICO credit score of 640 with a DTI of less than 45.00%
  
• Credit score requirements vary based on financing and property type
  
• Minimum FICO credit score of 680 with DTI greater than 45.00%, but less than 50.00%
  
• Credit score requirements vary based on financing and property type
  

NEXT HOME PROGRAM

• Down Payment Assistance (DPA) of 2.50% or 3.50%
  
• Based on the purchase price
  
• Not to exceed the appraised value
  
• FHA or Conventional 30-year fixed-rate loan
  
• Minimum FICO credit score of 640 with a debt-to-income ratio of less than 45%
  
• Credit score requirements vary based on financing and property type
  
• Minimum FICO credit score of 680 with debt-to-income ratio greater than 45%, but less than 50%
  
• Credit score requirements vary based on financing and property type
  

things to note:

-This is a second mortgage

-Forgivable in 9 years so long as on time payments are made

-Refinancing, selling or foreclosure will require repayment in full of the 2nd loan