Issue: Q&A - May 25, 2019

Fannie Mae & Freddie Mac – Liquidity Calculation: Do Fannie Mae and Freddie Mac have the same liquidity calculation for self-employed income? NEW – Liquidity Calculator

Answer: You should be able to use the same calculator for either agency; since the methodology is the same, the calculation itself mathematically does not change between the agencies.  Mortgage Currentcy has a liquidity calculator hosted on their site under charts & checklists, category Universal. Supporting Resources Liquidity Calculator [Article Published in Rule & Regulation […]

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VA – Child Care Calculation DTI & Residual: Does Child Care need to be included in the DTI and Residual Income Calculation, or just the Residual Income Calculation? NEW – VA Residual Income Calculator

Answer: The VA Loan Analysis form is where BOTH the Ratios and the Residual Income are calculated. Child Care is listed in the Debts and Obligations section of the VA Loan Analysis and is deducted for both the DTI and Residual Income Calculations. Social Media Post VA will count child care costs in when qualifying […]

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VA – Discount Points on an IRRRL: Does VA require an appraisal when any discount points are being charged on an IRRRL? VA Refinance Comparison Chart

Answer: VA only requires an appraisal on an IRRRL when a fixed rate is refinanced to an ARM rate and the 2% reduction in rate was produced solely from discount points.  (See the details below.) Reference: VA Guidelines – Chapter 4 Fixed to ARM: New rate must be 2% lower and the new rate can’t be […]

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VA – Overtime Income: If we have fewer than 2 years’ overtime income, is it an automatic denial with VA or is there some flexibility? VA Chapter 4 Changes – Chart

Answer: VA wants to see a 2-year history of overtime (see guideline below).  Note that they will allow overtime income earned for 12 months or more to offset debts of 6-24 months in duration, which can be a deal-saver is certain cases. Reference: h. Income from Overtime Work, Part Time Jobs, Second Jobs, and Bonuses […]

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USDA – Horse Barns: If the property has a horse barn, does that invalidate this property for USDA?

Answer: Homeowners are allowed to have horses and a barn for them, as long as the building is not a business or is income producing. USDA does not restrict homeowners owning horses, or having a barn, for that matter. Reference: Ref: 3555.201 Chapter 12: Property and appraisal requirements Income-Producing Buildings.  The property must not include […]

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