Ok, I know I have talked about this before on the forums and stuff, but I am going to put it in another context and all together here. In my opinion right now in the market (March 1, 2008) there are very few options in the market for retail financing. Specifically first time homebuyers financing. The main and only option I would trust for first time homeowners is FHA. FHA is a federally insured loan program that is specifically for challenged buyers that are trying to buy a home. There is not a credit requirement when using FHA, so the credit score of the buyer does not matter. Here are the highlights of the program; Must be current for the last 12 months on all accounts that are reporting. Must have 3 verifiable trade lines with the positive 12 months worth of payment history. Max of 45% DTI (debt to income ratio) Verifiable income Steady job history for the last 2 years These are the main highlights of the program. I prefer to use a FHA lender that does manual underwriting. This means that they will actually look at the deal and allow the originator to explain any issues to the underwriter. They will also allow for alternative lines of credit for the buyer. This means that your buyer can use a power bill, cell phone bill, or finance on the lot car note to be counted for a credit reference. This really helps when you are dealing in the “less than” neighborhoods that we are capable of buying houses in. A couple of other points to make on this program. The requirement for down payment funds is 3% down. The funds must be sourced and seasoned, which means they need to know where they came from (sourced) and how long they buyer had them (seasoning). This is to ensure that the seller is not contributing more than the maximum to the deal. So that takes us to sales concessions. With the FHA product the seller can contribute up to 6% of the sales price for closing. This is the maximum that the seller can contribute toward the sale and must be stipulated on the sales contract. You must use an FHA approved appraiser when doing these loans, and the lender will have to order it and it goes through a random selection process in most markets. So that is the break down on the FHA financing. So then you need a lender to deal with for the financing. I suggest using a direct lender if at all possible. This means using a company that can process the loans in house for the most part. The more disconnect from the lender the more difficult it is to do the loan. If you ask the lenders if they do manual underwriting you will find the lender for you. A couple of things that are important when dealing with these lenders; Communication is a must, they must call back when they say they will and if you have a client they need to be able to call you within 20 or 30 minutes or so. Productivity is a must, they need to have sense of urgency to deal with these customers. You have to capture their interest and push the deal from the jump and the lender pushing is one of the keys to the success of the program. Make them check the clients credit for you, so that there is a disconnect between you and the lender. There are a lot of new RESPA laws out there and with the new patriot act and identity theft what it is now days, let someone else be responsible. Not to mention the cost of pulling the credit. You also want someone that will give you an update on a regular basis regarding your clients, so you must be able to talk to them and get along from a personal standpoint as well. This is a client relationship that will make both of you a lot of money and it should not be entered into lightly.

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