Selling Guide

Published December 16, 2020

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What are the requirements for a purchase transaction with LTV, CLTV, or HCLTV ratios over 95%?

Requirements for Purchase Transactions with LTV, CLTV, or HCLTV Ratios of 95.01 – 97%

If the LTV, CLTV, or HCLTV ratio exceeds 95% for a purchase transaction, the following requirements apply.

Criteria Requirements
LTV, CLTV, or HCLTV Ratio 95.01 to 97%

Note: The CLTV ratio can be up to 105% if the subordinate lien is a Community Seconds loan.

Loan Type Fixed-rate loans with terms up to 30 years.

Note: High-balance and ARM loans are not permitted.

Property and Occupancy One-unit principal residence. Manufactured housing is not permitted, unless the property meets the MH Advantage requirements. All borrowers must occupy the property unless there is a Community Seconds subordinate lien.
Borrower Eligibility
  • At least one borrower must be a first-time home buyer, as indicated on the Form 1003 in the Declarations section , when at least one borrower responds “No” to the question about having an ownership interest in a property in the last three years.
  • At least one borrower on the loan must have a credit score.
Homeownership Education If all borrowers are first-time homebuyers, homeownership education is required. See B2-2-06, Homeownership Education and Housing Counseling for requirements.
Underwriting Method DU only
Reserves Reserves requirements will be determined by DU.
Other All other standard Selling Guide policies apply.

Note: The above requirements do not apply to HomeReady mortgage loans. See B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility for requirements for HomeReady mortgage loans with LTV, CLTV, or HCLTV ratios of 95.01 – 97%.

For additional information, see B2-1.3-01, Purchase Transactions.

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