North
Carolina 97% Home Mortgage Loan Programs
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888.694.0455 ext 85 or Apply
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The 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.
The 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.
The 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.
The following are
highlights of this loan program:
Down Payment Requirements:
The minimum down payment required for this type of loan is 3%
of the sales price for owner-occupied properties only.
Income 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).
Eligible 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.
Closing 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.
Assumability:
This type of loan is not assumable.
Pre-payment Penalty:
Not applicable.
Cash Reserves:
The borrower is required to have a minimum of one month cash reserves
in the bank by the close of escrow.
Gift Funds:
Gifts are allowed from a relative, church, municipaility, or a
non-profit organization.
Credit Scoring:
Generally Fannie Mae and Freddie Mac require a minimum credit
score of 620.
Co-Signers (Non-Occupant
Co-Borrowers): Not allowed.
Qualifying 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.
Mortgage Insurance:
Required for all purchases with a down payment less than 20% of
the purchase price.
