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Conventional | FHA | VA | USDA
DPA | ITIN | Manu. Housing - FHA | Rental Income |

Conventional

What Realtors Actually Need to Know
Conventional financing is one of the most common mortgage options and can work for primary residences, second homes, and investment properties.

🏠 HOW MUCH DOES THE BUYER NEED DOWN?

Primary Residence
• As little as 3% down for eligible first-time homebuyers
• 5% down is a common conventional option
• 20% down is NOT required

Second Home
• As little as 10% down in some situations

Investment Property
• Typically 15%–25%+ down, depending on the property and loan structure

💡 REALTOR TAKEAWAY → Don't assume a conventional buyer needs 20% down. A qualified buyer may be able to purchase a primary residence with just 3%–5% down.

💰 WHAT ABOUT MORTGAGE INSURANCE?
Putting less than 20% down will generally mean the buyer has private mortgage insurance (PMI).
Unlike FHA mortgage insurance, conventional PMI doesn't necessarily stay for the life of the loan and may eventually be removed once applicable requirements are met.

The actual cost can vary significantly based on the buyer's:
• Credit profile
• Down payment
• Loan amount
• Overall loan structure

💡 REALTOR TAKEAWAY → Don't automatically steer a buyer toward 20% down just to avoid PMI. Sometimes keeping cash available for renovations, reserves, or other goals can make more sense.

📊 DOES MY BUYER NEED PERFECT CREDIT? No.

Conventional financing can work for buyers across a range of credit profiles. However, credit can have a meaningful impact on the interest rate, mortgage insurance, and overall cost of the loan.
For buyers with lower credit scores, it can be worth comparing Conventional vs. FHA rather than assuming one program is automatically better.

💡 REALTOR TAKEAWAY → A credit score alone doesn't tell you which loan program is best. Let the lender compare the actual payment and cash-to-close options.

💳 WHAT ABOUT DEBT-TO-INCOME?
Car payments, student loans, credit cards, and other monthly obligations can affect how much house a buyer qualifies for. But qualification isn't based on one universal DTI number. Automated underwriting evaluates the buyer's overall financial profile.

⚠️ WATCH OUT → A new car payment, new credit card balance, or other debt taken on before closing can change the buyer's qualification.

💡 REALTOR TAKEAWAY → Encourage buyers to talk to their lender before opening new credit or taking on additional debt during the transaction.

👔 SELF-EMPLOYED BUYERS
A business owner earning $250,000 in gross revenue does not necessarily have $250,000 of qualifying income.
Mortgage qualifying income is generally determined using the borrower's tax returns and applicable underwriting guidelines.

💡 REALTOR TAKEAWAY → Get self-employed buyers connected with the lender early—ideally before you establish a price range or start seriously shopping.

🎁 CAN THE BUYER USE GIFT FUNDS? Yes.
Eligible gift funds can often be used toward the buyer's down payment and/or closing costs.
Gift documentation requirements apply, so the buyer should coordinate with the lender before moving the money.

💡 REALTOR TAKEAWAY → If gift funds are part of the plan, tell the lender upfront. Don't have the buyer or donor start transferring money without instructions.

🤝 HOW MUCH CAN THE SELLER CONTRIBUTE?

Primary Residence & Second Home

Less than 10% Down → 3% Maximum
10%–24.99% Down → 6% Maximum
25% or More Down → 9% Maximum

Investment Property
All Down Payment Amounts → 2% Maximum

Seller contributions can generally help cover eligible:
• Closing costs
• Prepaid expenses
• Discount points
• Temporary rate buydowns
• Permanent rate buydowns

⚠️ IMPORTANT → Seller contributions cannot simply become extra cash back to the buyer or be used as additional down payment.

💡 REALTOR TAKEAWAY → Before writing a large seller credit into an offer, call me. I'll calculate how much the buyer can actually use and help you structure the concession appropriately.

⭐ 5 THINGS I WANT EVERY REALTOR TO REMEMBER
1. CONVENTIONAL DOES NOT MEAN 20% DOWN.
Primary-residence buyers may qualify with as little as 3%–5% down.

2. PMI ISN'T NECESSARILY PERMANENT.
Don't assume putting 20% down is always the best financial strategy.

3. DON'T JUDGE QUALIFICATION FROM INCOME OR CREDIT SCORE ALONE.
The complete borrower profile matters.

4. SELF-EMPLOYED BUYER? GET ME INVOLVED EARLY.
Gross business revenue and mortgage qualifying income can be very different.

5. CALL BEFORE STRUCTURING SELLER CONCESSIONS.
I'll help determine what the buyer can actually use so you're not leaving money on the table—or writing an unusable credit into the contract.

FHA

What Realtors Actually Need to Know

FHA loans are government-insured mortgages designed to make homeownership more accessible—particularly for buyers with smaller down payments, limited savings, or less-than-perfect credit.

They aren't just for first-time homebuyers.

🏠 HOW MUCH DOES THE BUYER NEED DOWN?

3.5% Down

• Available with a 580+ qualifying credit score under FHA guidelines
• The buyer does NOT have to be a first-time homebuyer
• FHA financing is generally for a primary residence

Below 580 Credit

FHA guidelines may allow financing with a larger down payment, but lender requirements can vary significantly.

💡 REALTOR TAKEAWAY → FHA isn't simply a "first-time homebuyer loan." It can be a strong option for repeat buyers too—especially when credit or cash-to-close makes Conventional financing less attractive.

💰 WHAT ABOUT MORTGAGE INSURANCE?

FHA financing generally includes two forms of mortgage insurance:

Upfront Mortgage Insurance Premium (UFMIP): Currently 1.75% of the base loan amount and is typically financed into the mortgage.
Annual Mortgage Insurance Premium (MIP): Paid monthly as part of the buyer's mortgage payment.

For many common FHA loans with less than 10% down, annual mortgage insurance generally remains for the life of the loan.

With 10% or more down, it may be removed after the applicable FHA mortgage insurance period.

💡 REALTOR TAKEAWAY → Don't compare FHA and Conventional based on interest rate alone. Mortgage insurance can materially change the buyer's total monthly payment.

📊 DOES MY BUYER NEED PERFECT CREDIT?

No—and this is one of FHA's biggest strengths. FHA can often be more forgiving for buyers with lower credit scores or previous credit challenges.

That doesn't automatically mean FHA is the better option, though. Depending on the buyer's credit, down payment, and overall profile, we should compare FHA vs. Conventional side-by-side.

💡 REALTOR TAKEAWAY → Don't assume a buyer with a lower credit score can't purchase a home. Get me involved before ruling them out.

💳 WHAT ABOUT DEBT-TO-INCOME?

FHA can sometimes accommodate higher debt-to-income ratios than buyers expect. There isn't one DTI number that tells us whether every FHA borrower will qualify. Automated underwriting evaluates the buyer's complete financial profile.

That includes factors such as:

• Credit history
• Income
• Assets and reserves
• Existing monthly debts
• Overall loan structure

⚠️ WATCH OUT → Just like Conventional financing, taking on new debt during the transaction can change the buyer's qualification.

💡 REALTOR TAKEAWAY → Don't disqualify a buyer because their DTI "sounds too high." Let the lender run the actual numbers.

👔 SELF-EMPLOYED BUYERS

Self-employed buyers can absolutely use FHA financing. However, gross business revenue is not the same as qualifying income.

A business generating $250,000 in gross revenue does not necessarily give the borrower $250,000 of qualifying income. Tax returns and applicable FHA income guidelines are generally used to determine the income available for qualification.

💡 REALTOR TAKEAWAY → Get self-employed buyers connected with the lender early—ideally before establishing their price range or seriously shopping for homes.

🎁 CAN THE BUYER USE GIFT FUNDS? Yes.

FHA is generally very flexible when it comes to eligible gift funds.

Gift funds may be used toward eligible:

• Down payment
• Closing costs
• Other allowable funds needed to close

Documentation requirements apply, so buyers should coordinate with the lender before transferring money.

🤝 HOW MUCH CAN THE SELLER CONTRIBUTE?

FHA allows substantial seller contributions toward a buyer's eligible closing costs.

Seller Contribution: Up to 6% of the sales price

This can generally be used toward eligible:

• Closing costs
• Prepaid expenses
• Discount points
• Temporary rate buydowns
• Permanent rate buydowns

⚠️ IMPORTANT → Seller contributions cannot become cash back to the buyer or be used toward the buyer's required minimum investment when not otherwise permitted.

The buyer also needs enough eligible costs to actually use the negotiated credit.

💡 REALTOR TAKEAWAY → Before writing a large seller credit into an offer, call me. I'll calculate approximately how much the buyer can actually use and help you structure the concession effectively.

🔨 WHAT ABOUT THE FHA APPRAISAL?

This is one of the biggest areas where Realtors should understand the difference between FHA and Conventional financing.

An FHA appraisal isn't a home inspection, but the appraiser does evaluate certain property requirements related to safety, security, and soundness in addition to determining value.

Potential issues can include things such as:

• Peeling or defective paint, particularly on older homes
• Missing or unsafe handrails
• Broken windows
• Exposed wiring
• Certain roof or structural concerns
• Utilities or major systems that aren't functioning properly
• Other health or safety concerns

Not every cosmetic defect is an FHA problem.

⚠️ WATCH OUT → If you're showing an FHA buyer an older home or a property with obvious deferred maintenance, involve me early if you're unsure whether something could become an appraisal issue.

💡 REALTOR TAKEAWAY → FHA does NOT mean the house has to be perfect. But obvious health, safety, or structural concerns can create required repairs before the loan can close.

🏘️ WHAT TYPES OF PROPERTIES CAN FHA FINANCE?

FHA financing is primarily designed for owner-occupied primary residences.

Eligible properties may include:

• Single-family homes
• Certain condos
• Certain manufactured homes
• 2–4 unit properties, subject to FHA requirements

The borrower generally needs to occupy the property as their primary residence.

⭐ 5 THINGS I WANT EVERY REALTOR TO REMEMBER

1. FHA IS NOT JUST FOR FIRST-TIME HOMEBUYERS.
Repeat buyers can use FHA financing too.

2. 3.5% DOWN CAN GET A BUYER INTO A HOME.
A buyer doesn't necessarily need a large down payment to purchase.

3. FHA CAN BE MORE FORGIVING WITH CREDIT.
A buyer who doesn't look ideal for Conventional financing may still have a strong FHA option.

4. PROPERTY CONDITION MATTERS.
The home doesn't need to be perfect, but certain health, safety, and property-condition issues can require repairs.

5. SELLER CONTRIBUTIONS CAN BE POWERFUL.
FHA may allow up to 6% toward eligible buyer costs. Before writing the offer, call me and we'll determine how to use the concession strategically.

VA

VA LOAN QUICK REFERENCE GUIDE

WHAT IS A VA LOAN?
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs and available to eligible Veterans, Active-Duty Military, National Guard Members, Reservists, and certain surviving spouses.

Best For
✅ Eligible Veterans and Military Members
✅ Buyers Looking for Little to No Down Payment
✅ Borrowers Looking to Avoid Monthly Mortgage Insurance
✅ Buyers Preserving Cash for Emergencies or Improvements
✅ Borrowers with Strong Residual Income

MINIMUM DOWN PAYMENT
Primary Residence

✅ 0% Down Payment Available
✅ 100% Financing Available Up to County and Entitlement Limits (when applicable)
Second Home❌ VA financing is not available for second homes.
Investment Property ❌ VA financing is not available for investment properties.
Multi-Unit Properties ✅ 2-4 Unit Properties may be eligible if the Veteran occupies one unit as their primary residence.

Agent Tip: VA buyers can often purchase with no down payment while keeping substantial cash reserves after closing.

MORTGAGE INSURANCE GUIDE
✅ VA loans do not require monthly mortgage insurance (PMI or MIP).
✅ This is one of the largest payment advantages compared to Conventional and FHA financing.
Quick Rule
✅ Eligible VA borrowers can often finance 100% of the purchase price without monthly mortgage insurance.
VA Funding Fee
✅ Most VA loans require a one-time VA Funding Fee.
✅ The funding fee may be financed into the loan amount.
✅ Certain Veterans may be exempt from the funding fee due to service-connected disability status.
Agent Tip
✅ Many Veterans qualify for significantly more buying power because they are not paying monthly mortgage insurance.

CREDIT SCORE GUIDE

740+ Excellent borrower profile
700-739 Very strong borrower
660-699 Strong VA candidate
620-659 Common VA borrower range
Below 620 Review with loan officer

Agent Tip
✅ VA loans are often more forgiving than Conventional financing when credit scores are lower.
✅ Eligibility, residual income, and overall file strength remain important factors.
DEBT-TO-INCOME (DTI) BASICS

What Is DTI?
DTI compares a borrower's monthly debt payments to their gross monthly income.

What Counts?
✅ Car Payments
✅ Student Loans
✅ Credit Cards
✅ Personal Loans
✅ Child Support
✅ Alimony

Usually Does Not Count
❌ Utilities
❌ Cell Phone Bills
❌ Internet
❌ Gym Memberships
❌ Car Insurance

DTI Guidelines
✅ VA financing places significant emphasis on Residual Income in addition to DTI.
✅ Higher DTIs may be allowed when strong residual income and compensating factors are present.
Agent Tip
✅ VA borrowers often qualify when Conventional financing is unable to support the same debt ratios.

SELF-EMPLOYED BUYERS

Common Documentation Required
✅ Personal Tax Returns
✅ Business Tax Returns (if applicable)
✅ Year-to-Date Profit & Loss Statement (when required)
✅ Additional business documentation may be requested
Tax Return Requirements
✅ We will generally request the most recent two years of tax returns for all self-employed borrowers.
✅ In certain situations, we may be able to qualify a borrower using only the most recent year of tax returns if we can document that the business has been operating and filing tax returns for at least five consecutive years and meets applicable underwriting requirements.

Realtor Warning
⚠️ A business owner with $250,000 in gross revenue does not necessarily qualify on $250,000 of income.
✅ Qualifying income is based on tax returns and allowable add-backs, not gross receipts.
Agent Tip
✅ If your buyer is self-employed, involve the loan officer early. Self-employed income calculations can significantly impact buying power.

GIFT FUNDS
Can Buyers Use Gift Funds?
✅ Yes, gift funds are generally allowed from eligible sources.
Common Sources
✅ Parents
✅ Grandparents
✅ Siblings
✅ Immediate Family Members
✅ Other Acceptable Donors (where permitted)

Best Practice
✅ Whenever possible, it is often easier for underwriting when the donor wires gift funds directly to the title company rather than first depositing the funds into the borrower's account.
✅ Direct-to-title transfers can reduce documentation requirements and simplify the paper trail.

Documentation Still Required
✅ Gift Letter
✅ Verification of Donor's Ability to Provide the Gift
✅ Evidence of the Transfer of Funds

Agent Tip
✅ Disclose gift funds early so documentation can be collected before underwriting requests it.

INTERESTED PARTY CONTRIBUTIONS (SELLER CONCESSIONS)
What Are Seller Concessions?
Seller concessions are funds provided by the seller to help cover a buyer's closing costs and prepaid expenses.

Maximum Seller Concessions
✅ There is no standard percentage cap on seller-paid closing costs.
✅ However, VA Seller Concessions are generally limited to 4% of the sales price for certain items classified as concessions.

Seller Contributions Can Typically Be Used For
✅ Closing Costs
✅ Prepaid Taxes
✅ Homeowners Insurance
✅ Lender Fees
✅ Discount Points
✅ Temporary & Permanent Rate Buydowns
✅ VA Funding Fee

Important Notes
✅ VA distinguishes between seller-paid closing costs and seller concessions.
✅ Certain concessions are subject to the 4% limitation.
✅ Always review proposed concessions with the loan officer before writing the contract.

Best Practice
✅ Discuss seller contributions early when structuring offers.
✅ VA loans often provide substantial opportunities to reduce the Veteran's cash-to-close requirements.

DO NOT LET BUYERS
❌ Buy a Vehicle
❌ Open New Credit Cards
❌ Apply for Additional Financing
❌ Change Jobs
❌ Quit Their Job
❌ Deposit Large Amounts of Undocumented Cash
❌ Co-Sign for Someone Else
❌ Miss Payments on Existing Debts

FHA MANUFACTURED HOME REALTOR FIELD GUIDE

What Realtors Should Look For Before Showing a Manufactured Home to an FHA Buyer

PURPOSE OF THIS GUIDE
This is not an FHA loan guideline sheet. This guide is designed to help Realtors quickly determine whether a manufactured home is likely to qualify for FHA financing before your client falls in love with the property.

Many manufactured homes are advertised as FHA eligible but have property issues that can delay or eliminate financing. Use this guide when searching MLS listings or previewing properties.

THE FIRST QUESTION

Is It Actually a Manufactured Home?
✅ Look for HUD labels
✅ Verify the home was built on or after June 15, 1976
✅ Confirm the property is classified as real estate
✅ Confirm the borrower is purchasing both the home and the land

🚩 Red Flag:
Homes built before June 15, 1976 are generally not FHA eligible.

PROPERTY ELIGIBILITY CHECKLIST
Before showing the property, verify:
✅ One-family residence
✅ At least 400 square feet
✅ Permanently attached to the land
✅ Connected to utilities
✅ Home and land sold together
✅ Classified as real property
✅ Original HUD labels can be located (or replaced through IBTS)

🚩 Red Flags
❌ Leasehold properties
❌ Tribal land
❌ Community Land Trusts
❌ Illinois Land Trusts
❌ Group homes
❌ Shared equity arrangements
❌ Mixed-use properties
❌ Seller carrybacks

FOUNDATION CHECK
This Is One of the Biggest FHA Issues
✅ Home must be permanently affixed to a foundation
✅ Engineer certification is generally required to confirm compliance
✅ Foundation must meet HUD manufactured housing requirements
✅ Existing foundation certifications may be acceptable if no alterations have occurred

🚩 Red Flags
❌ Visible settling
❌ Structural movement
❌ Foundation damage
❌ Additions that were never engineered
❌ Home sitting on blocks without proper foundation support

LOOK UNDER THE HOUSE
Running Gear Must Be Removed
✅ Wheels removed
✅ Axles removed
✅ Tow hitch removed
🚩 Red Flag
If the original towing components remain attached, FHA financing may not be possible until corrected.

SKIRTING & PERIMETER ENCLOSURE
Realtors Should Look For
✅ Permanent skirting
✅ Continuous perimeter enclosure
✅ Proper ventilation
✅ No exposed crawl space
✅ No vermin, debris, or damage
🚩 Red Flags
❌ Missing skirting
❌ Damaged skirting
❌ Large openings
❌ Exposed crawl spaces
❌ Temporary materials

ADDITIONS & MODIFICATIONS
Ask These Questions
Has a room been added?
Has a porch been enclosed?
Has a garage conversion occurred?
Has living area been expanded?

If yes:
✅ Additional engineering review may be required
✅ Structural certification may be required
🚩 Red Flag

Unpermitted additions are one of the most common manufactured home financing problems.

HUD LABELS & DATA PLATES
Verify These Exist
✅ HUD Certification Labels
✅ HUD Data Plate

*Typical Locations: Kitchen cabinet, Pantry, Electrical panel area,Utility room

If missing:
✅ Documentation may be obtained through IBTS
Missing labels can delay closing if not identified early.

FLOOD ZONES
Pay Special Attention
Manufactured homes in certain flood zones can create major issues.
🚩 Red Flags
❌ FEMA Flood Zone A
❌ FEMA Flood Zone V

If the property is located in a flood zone:
✅ Notify the lender immediately before submitting an offer
✅ Additional documentation may be required

APPRAISAL CHALLENGES
Manufactured Homes Need Manufactured Home Comparables
✅ Appraiser must use manufactured home sales
✅ At least two manufactured-home comparables are generally required
🚩 Red Flags
Properties in markets with very few manufactured-home sales may face appraisal challenges.

COMMON DEAL KILLERS
Avoid These Surprises
❌ Home moved from another homesite
❌ Not permanently attached
❌ Missing HUD labels
❌ Missing engineer certification
❌ Visible structural problems
❌ Unpermitted additions
❌ Home not converted to real property
❌ Borrower purchasing home without land
❌ Tribal land
❌ Leasehold property

If you can confirm the following, you're usually off to a strong start:
✅ Built after June 15, 1976
✅ Permanently affixed foundation
✅ Wheels, axles, and hitch removed
✅ HUD labels present
✅ Property sold with land
✅ Converted to real property
✅ No questionable additions
✅ Proper skirting and enclosure
✅ Not located on tribal land or leasehold property

Pick a loan type you need help with

Conventional | FHA | VA | USDA DPA | ITIN | Manu. Housing - FHA | Rental Income |

Conventional

Less than 10% Down → 3% Maximum

10%–24.99% Down → 6% Maximum

25% or More Down → 9% Maximum

FHA

VA

✅ 0% Down Payment Available

✅ 100% Financing Available Up to County and Entitlement Limits (when applicable)

Second Home❌ VA financing is not available for second homes.

Investment Property ❌ VA financing is not available for investment properties.

Multi-Unit Properties ✅ 2-4 Unit Properties may be eligible if the Veteran occupies one unit as their primary residence.

740+ Excellent borrower profile

700-739 Very strong borrower

660-699 Strong VA candidate

620-659 Common VA borrower range

Below 620 Review with loan officer

Manufactured Housing - FHA

Conventional | FHA | VA | USDA
DPA | ITIN | Manu. Housing - FHA | Rental Income |