In October of last year, Congress and HUD banned the long running Nehemiah down payment assistance program.  At a time when the lending rules had begun eliminating thousands of buyers from a market that desperately needed their participation, this was an ill-conceived and poorly reasoned response to the mortgage crisis.  In their panic to put out the incipient blaze, Congress grabbed the gas can instead of the water bucket.

But a new bill–H.R. 600–has been announced in Congress to reinstate the Nehemiah program, and there is a ground swell of support.  At a time when policies to stabilize real estate values are short on substance and long on hot air, this program offers a solution that does not rely upon any government or tax payer subsidies.  That alone merits attention.

So go and make your voice heard and write your senators and congresspeople to encourage them to support H.R. 600.   Unlike all the legislative ideas that haven’t worked to fix real estate, Nehemiah has helped nearly half a million people since 1998.  Check it out.

The new 2009 VA loan limits have been announced. Here is a link to those new limits by County.  Although somewhat lower than the temporary 2008 limits, they still offer much needed help in high costs areas.

VA Maximum Loan Limits

People sometimes ask if VA does Jumbo Loans.  Ummm…sort of.   As I wrote in a previous post, VA technically has no maximum loan limit.  What it does have is a maximum amount that it will guarantee; generally 25% of $417k.  However, in the high costs counties, that amount may be higher.

If you wish to buy a home beyond those limits, you must effectively make up the VA guarantee difference with a down payment.  For more explanation on that, read my previous post above or this one, or click this link to calculate that down payment for the home you are considering.

And give me a call when it’s time to get ready.  I can get you pre approved with either VA or CalVet if you are buying in California!

Readers will take note that I have recently been writing about the remaining options for 100% financing. Back in August, I wrote about the new California Housing Finance Agency’s (CalHFA) Community Stabilization Home Loan Program (CSHLP) which…

“began in July of this year and was funded by $200 mil in tax exempt bonds. It provides 100% financing at low 30 year fixed rates to qualified first-time buyers who select a property from a list of foreclosed homes. The list includes properties owned by lenders who have agreed to partner with CalHFA to offer reduced prices.”

You have to be a first time buyer and purchase a property from their list, but if you meet the guidelines and qualify, you get to finance 100% of the purchase price at a 5.5% 30 year fixed rate. Sweet!

The SMART Loan Program From CalHFA

Now, CalHFA has announced another first-time buyer program: the SMART Loan Program (I’m not sure what the acronym stands for). CalHFA has either bought or foreclosed on some additional properties because unlike the CSHLP list above, these are homes they own. Check that list of properties here.

In both cases, qualified first-time buyers need zero down payment and there is no minimum contribution of funds required. You can even combine CalHFA’s loans with other down payment assistance programs as available. There are sales price limits however; check those out here.  And there income limits based on family size; check those out here.

And if you have further question, email or call me.  If you qualify, I can get your approved quickly!

In the ongoing quest to unearth the few remaining 100% home loan options, I wrote a recent article about VA loans called 100% Financing: Focusing on VA.  Since then, I have been asked numerous times whether or not a veteran can have two VA loans.

The answer is yes and yes.  Now I know that the question above refers to two VA loans and not two questions, so let me explain the two yes answers.   As most lenders and veterans already know, a veteran can have two VA loans in succession.  Once a VA loan has been paid off and the property sold, VA eligibility is reinstated and reusable.  On a one time basis, a veteran can even pay off the VA loan while retaining the property.

But the second part of that question is much more interesting.

Can a Veteran Have Two Concurrent VA Loans?

In this down market, it is not unusual for a homeowner to want to buy a new home while waiting until the market improves before selling the current home.  So can the veteran purchase a second using her VA entitlement while retaining the first?

Yes, often they can.  The key is how much of the entitlement was used to buy the first home.  As I stated in my previous VA post, the maximum amount of the entitlement shown on each veteran’s Certificate of Eligibility is $36,000.  That represents a 25% VA guarantee on the old $144,000 loan amount.  But those figures are obsolete.  There is a bonus entitlement of $68,250 available to the veteran buying a home valued at more than $144,000.   The two entitlement amounts total $104,250 which is 25% of the current conforming loan limit of $417,000.  Got it?

Let’s look at how this worked out for a recent client of mine.

Example

A recent client of mine bought a home 8 years ago in Southern California for $120,000.  Of his available $36,000 entitlement, he used only $30,000 (25% of the $120k).  He came back to Sacramento recently from overseas duty and wanted to buy a $290,000 home while retaining the SoCal financed home as a rental.

Because the price of the new home exceeds $144,000, the veteran has 6,000 remaining of his original entitlement plus the bonus entitlement of $68,250.  That total ($75,250) equals 25% of $297,000, so he has enough remaining entitlement to cover the full cost of the new home.  He could buy a more expensive home by simply making up the difference in cash.

As more veterans return home, questions about VA are arising more frequently.  My next post will focus on CalVET loans, available here in California.

Leave your questions or comments below, and join in the conversation!

As 100% evaporates, first-time home buyers are left scrambling for down payment funds again in order to buy a homes.  This full scale lending retreat was caused by the perfect storm of declining real estate values, defaulting borrowers, and the attack on seller-funded down payment assistance programs like Nehemiah.

However, you’ll be glad to know that there are a few survivors, and I’ll be covering those in coming posts.  For now let’s take a closer look at one terrific option.

Qualifying for a VA Home Loan

VA loans are available to honorably discharged veterans or those still on active duty in one of the branches of the military.  Here are some highlights:

• 100% purchase financing
• 90% LTV refinances (100% for distressed veterans with subprime mortgages)
• No mortgage insurance
• No reserves required
• No “front end” ratio maximum
• Up to 4% seller credit
• Owner occupied only
• 1 to 4 unit properties
• VA Funding Fee can be financed into the loan, and is waived for disabled Vets
• 30 & 15 yr fixed rate loans available, with more options on the way

Read the rest of this entry »

This weekend is the virtual end of Nehemiah and seller-funded down payment assistance programs. Although the formal deadline is October 1, 2008, lenders will stop taking new applications and lock for this program in the next week or so. Unless you have a property under contract this weekend, chances are slim that you’ll be able to get your down payment help from the seller.

So what’s a buyer to do? There are a few options that remain (I’ll be writing about VA and CalVET loans in the coming weeks). Today however, I want to address a program that has just been expanded to include Sacramento County. It is run by the California Housing Finance Agency (CalHFA), the state’s provider of affordable loans for first-time home buyers.

The Community Stabilization Home Loan Program began in July of this year and was funded by $200 mil in tax exempt bonds. It provides 100% financing at low 30 year fixed rates to qualified first-time buyers who select a property from a list of foreclosed homes. The list includes properties owned by lenders who have agreed to partner with CalHFA to offer reduced prices. Here are some pertinent facts:

• You must be a first-time buyer (have not owned a home in the last three years)
• You must live in the property (you cannot convert this to a rental for as long as it remains encumbered by the CalFHA loan)
• Can be combined with California Homebuyer’s Downpayment Assistant Program (CHDAP) for a total 103% financing
• Sacramento sales price limits: $580,000
• Sacramento income limits: 2 person family, $85,200 / 3+ persons, $99,400
• Home buyer education required
• Select a property from the approved list (scroll down until you see Sacramento County)
• 30 yr fixed rate loan, currently at 5.5%

Want to see if you qualify? Give me a call or send an email if you live in California.

The recent Housing bill sailed through Congress and across the President’s desk, easily gathering the required ink along the way.   Although complicated enough that some provisions won’t take effect until next year, it appears that the Nehemiah, a popular seller-funded down payment assistance program (SFDAP),  and it’s clones are headed to the freezer on October 1, 2008.

The problem with these types of programs lies in the phrase “seller-funded”.   It’s one thing to qualify for a government agency grant or silent 2nd loan, because those are designed to help low income folks who couldn’t save up the required down payment.   It’s another thing for a program to be funded by the seller and to require only that the buyer’s first loan allow for a gift from a non-profit.

Don’t get me wrong; I’m not against Nehemiah.  I have used the program a lot.  But as the lending industry continues to look for scapegoats in the current crisis, it will continue to cite higher default rates on these programs and deter investors from buying these loans in the secondary market.

I just received an email this morning from an underwriter at a prominent bank that was, until just now, allowing a 6% Nehemiah gift plus 6% in seller concessions.  Not any more.  She says the bank is going to get “really restrictive” on SFDAPs in the next few days, regardless of FHA’s policy.  “Investors don’t like these,” she says.   The bank will begin treating SFDAPs as part of the total seller concession and subjecting that to the normal limitations.