York 97% Home Loans
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 the area.
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 properties only.
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 of escrow.
Funds: Gifts are allowed from a relative, church, municipaility, or a non-profit
Scoring: Generally Fannie Mae and Freddie Mac require a minimum credit score
(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.