4501.10: LTV/TLTV/HTLTV ratios, Borrower contribution, reserves, sources of funds for Home Possible® Mortgages (10/29/18)
Property Type | Maximum LTV ratio | Maximum TLTV ratio | Maximum HTLTV ratio |
Fixed-Rate Mortgages | |||
1- unit* | 97% | 105%** | 97%** |
2- to 4-unit | 95% | 95% | 95% |
ARMs | |||
1- and 2-unit | 95% | 95% | 95% |
3- and 4-unit | 75% | 75% | 75% |
Manufactured Home | See Chapter 5703 | See Chapter 5703 | See Chapter 5703 |
See Section 4501.7 for additional LTV/TLTV/HTLTV ratio requirements for Home Possible Mortgages with non-occupying Borrowers.
Minimum contribution from Borrower personal funds, as described in Section 4501.10(c)(i) | |||
Property Type | Home Possible Mortgages with LTV, TLTV and HTLTV ratios ≤ 80% | Home Possible Mortgages with LTV, TLTV or HTLTV ratios >80% ≤95% | Home Possible Mortgages with LTV, TLTV or HTLTV ratios >95% |
1-unit | None | None | None |
Manufactured Home | None | None | N/A |
2- to 4-unit | None | 3% of value | N/A |
- 1-unit: None required
- 2- to 4-unit: Two months
Use | Permitted Sources of Funds |
Minimum Borrower contribution | Borrower personal funds |
Down Payment | Borrower personal funds Other eligible sources of funds |
Paying down the principal balance of the Mortgage being refinanced for a "no cash-out" refinance transaction | Borrower personal funds Other eligible sources of funds |
Closing Costs | Borrower personal funds Other eligible sources of funds Flexible sources of funds |
Reserves | Borrower personal funds Other eligible sources of funds |
- The Seller reasonably concludes, and can support, that the Borrower is a cash-basis individual and that the cash on hand is not borrowed and could be saved by the Borrower
- The Mortgage file contains the following documents supporting the Seller's conclusion:
- A completed Exhibit 23, Monthly Budget and Residual Analysis Form, or another document containing the same information, confirming that the total monthly residual income available for savings is a positive number
- Copies of six months' cash receipts (e.g., rent or utility receipts) or other alternative documentation (e.g., direct verifications or wire transfers) meeting the requirements of Section 5202.2(b)) to verify that recurring obligations, including the payment of revolving and installment debt, are customarily paid in cash
- A credit report, obtained at the time of loan application, meeting the requirements of Section 5203.1. The credit report must not show more than three Tradelines.
- Copies of three months' statements for any open revolving account that reveal cash advances are not the source of Borrower funds. Any cash advances must be explained and documented (i.e., a cash advance used in an emergency situation).
- An updated credit report obtained approximately one week before closing that does not show any new accounts or a substantial increase to an existing account that approximates, or exceeds, the amount of cash on hand provided by the Borrower
- The Mortgage file must have no indication that the Borrower typically uses checking, savings or similar accounts
- Evidence that all funds used to qualify the Borrower for the Mortgage transaction are deposited in a financial institution or are held in an institutional escrow account prior to closing
- Except as stated in item 6 below, an Agency that is not:
- The Seller or has participated in any aspect of the Mortgage origination process
- Affiliated with, under contract to, or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process
- For these purposes, "affiliated with" means that the Agency and the Seller or other party are related to each other as a consequence of one entity directly or indirectly controlling the other party, being controlled by the other party or being under common control with that party.
- A Related Person, or
- A Community Savings System (funds in excess of the Borrower contribution to the Community Savings System)
An unsecured loan must meet the following requirements:
- Must not contain provisions that allow or could result in negative amortization
- Must have a maturity date that:
- Does not exceed the maturity date of the Mortgage
- Is at least five years after the Note Date of the Mortgage, unless the unsecured loan is fully amortizing
- Must have an interest rate that is no greater than the Note Rate on the Mortgage
- Must not be a cash advance from a credit card or unsecured line of credit
- Must have its source, terms and conditions documented on the Form 65, Uniform Residential Loan Application
If the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly debt payment-to-income ratio; otherwise, the required monthly payments must be included in calculating the monthly debt payment-to-income ratio.
- All repairs and improvements to be completed by the Borrower that are listed in the sales contract and included in the appraisal report
- Repairs or improvements that are reflected on the appraisal report that are outstanding at the time of the appraisal. Credit for work completed prior to the original property inspection by the appraiser is not eligible for sweat equity.
- The value of the labor performed must be estimated by the appraiser or a cost estimating service and documented in the appraisal report or separately in the Mortgage file; and
- The value for materials furnished must either be estimated by the appraiser or a cost estimating service, or be calculated using receipts from the purchase of the materials. The estimates or costs as evidenced by receipts must be documented in the Mortgage file.
Property type | Maximum LTV/TLTV ratio |
1-unit Primary Residence | 97%/105% |
2- to 4-unit and Manufactured Homes | 95%/95% |
- The source of funds is an eligible source meeting all applicable Guide requirements (for example, a gift or grant from an Agency must meet the requirements in Section 5501.3(c))
- A contribution of at least 3% of value (as described in Section 4203.1) is made from Borrower personal funds and/or other eligible sources of funds as described in this section; and
- The source of funds is not funded through the Mortgage transaction, including differential pricing in rate, discount points, or fees for individual loans or across the Home Possible offering
- Must not contain provisions that allow or could result in negative amortization
- Must have a maturity date that:
- Does not exceed the maturity date of the Mortgage
- Is at least five years after the Note Date of the Mortgage, unless the unsecured loan is fully amortizing
- Must have an interest rate that is no greater than the Note Rate on the Mortgage
- Must not be a cash advance from a credit card or unsecured line of credit
- Must have its source, terms and conditions documented on Form 65
If the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly debt payment-to-income ratio; otherwise, the required monthly payments must be included in calculating the monthly debt payment-to-income ratio.