Loan Type Requirements
What is the minimum credit score typically required for a conventional loan and FHA?
620/580
What does ROI stand for?
Return on Investment
What does the acronym DPA mean in mortgage terms?
Down Payment Assistance
Credit card balances below THIS percentage of the total credit line is best for good scores.
30%
What is the Conventional maximum percentage of the sales price allowed for seller concessions?
3% when down payment is less than 10%. (Most Common)
6% - 75.1-90%LTV
9% - Less than 75%LTV
If a borrower puts 20% down on a conventional loan, what are they not required to pay?
Mortgage Insurance
What two ratios are used to evaluate a borrower’s ability to repay a mortgage?
DTI or debt to income ratio.
Front end or housing/income.
Back end or all liabilities/income.
What does the acronym ARM stand for in regard to mortgage loans?
Adjustable rate mortgage.
7/1 ARM example. Fixed rate for 7 years and adjusts with the market each year following.
7/6 is another example but it adjusts every 6 months.
Who invented credit scores in 1989? Hint: FICO
Fair Isaac Corporation - Bill Fair Earl Isaac
What is the FHA and USDA maximum percentage of the sales price allowed for seller concessions?
6%
What is the minimum down payment required for an FHA loan?
3.5%
Name the three government entities or GSE's that back mortgages.
Fannie Mae - Conventional
Freddie Mac - Conventional
Ginnie Mae - FHA,VA, USDA
What standard loan programs allow 100% financing or 0% down payment?
VA and USDA
What should buyers request when negotiating with creditors on collection accounts?
Deletion letter.
This is what is needed to remove the debt and history from credit reports. Most important thing!
What is the VA maximum percentage of the sales price allowed for seller concessions?
4% of the sale price, plus reasonable and customary loan costs on VA.
Total contributions may exceed 4% because standard closing costs do not count toward the total.
What is the maximum conforming loan limit for 2025?
$806,500. Anything over that requires JUMBO products.
How many days before closing must a CD be sent to a borrower from the lender to be compliant?
3 business.
What would the interest rate be on year one and two with a 2-1 buy down if the note rate is 7%.
5% year 1
6% year 2
7% year 3 and beyond.
What does the acronym LLPA stand for?
Loan Level Price Adjustments
This is in reference to credit score, DTI, and down payment and how they factor into the rate the buyer is qualified to get.
Name three common uses for seller contributions.
Reduce closing costs.
Repairs found during inspection.
Rate buydown...permanent or temporary.