CALIFORNIA HOUSING FINANCE AGENCY CalHFA …

1 CALIFORNIA HOUSING FINANCE AGENCY . CalHFA . Conventional Loan Program LAST REVISED: FEBRUARY 1, 2018. CalHFA CONVENTIONAL LOAN PROGRAM. Table of Contents I. Program Summary 1. II. Eligibility 1. a. Borrower Requirements b. Eligible Homebuyers c. Homebuyer Education d. Owner Occupancy e. Property Requirements f. Lender Eligibility Requirements 3. g. Broker Eligibility Requirements III. Underwriting & Compliance 3. a. Transaction type b. Term c. LTV and CLTV d. Maximum Loan Amount e. Fannie Mae High Balance Loan Limits f. Maximum Sales Price Limits g. Income & Sales Price Limits h. Income Requirements 4. i. Family income includes: j. Family income excludes: k. Qualifying Ratios 5. l. Minimum Credit Score m. Automated Underwriting n. Sales Concessions/Contributions 6.

2 O. Miscellaneous Lakeview Loan Servicing Underwriting Guidelines p. Mortgage Insurance q. Mortgage Insurance Options r. Genworth Mortgage Insurance Rates 7. IV. Subordinate Financing 7. a. CalHFA Subordinate Financing b. Non- CalHFA Subordinate c. Other Programs and Assistance 8. V. CalHFA Loan Process (Submission, Approval & Purchase) 8. VI. Fees 9. VII. Reservations, Rate Locks & Extensions 9. a. Reservations and Rate Locks 2018 CALIFORNIA HOUSING FINANCE AGENCY | ( ) ii CalHFA CONVENTIONAL LOAN PROGRAM. Table of Contents (cont.). VIII. Basic Home Protection Coverage 10. a. Mandatory Home Warranty Insurance Coverage IX. Pre-Closing Loan Submission 11. a. Loan Submission Process b. Forms X. Post-Closing Loan Delivery & Purchase 11. a. All CalHFA First Loans: b.

3 All CalHFA Subordinate Loan(s): c. CalHFA MCC Tax Credit Closing Package(s): 12. d. Forms XI. Frequently Asked Questions 13. a. Sales Tools And Marketing Materials 17. 2018 CALIFORNIA HOUSING FINANCE AGENCY | ( ) iii CalHFA CONVENTIONAL LOAN PROGRAM. Program Summary The CalHFA Conventional program is a Fannie Mae HFA Preferred fully amortized thirty (30) year fixed interest rate first mortgage. This loan is combined with either the MyHome Assistance Program (MyHome) or the School Teacher and Employee Assistance Program (School Program). The CalHFA Conventional loan is not subject to Recapture Tax. Eligibility Borrower Requirements Non-occupant co-borrowers are not allowed Each borrower must Non-occupant co-signers are not Be a citizen, permanent allowed resident alien or qualified alien Property Requirements Meet the credit, income and loan requirements detailed in this Sales price of the home cannot program handbook, as well as exceed CalHFA 's sales price limits CalHFA 's Lender Manual, Fannie established for the county in which Mae, the CalHFA -approved lender, the property is located.

4 The mortgage insurer and CalHFA 's Property must be a single-family, master servicer's requirements one-unit residence, including con- dominium/PUDs which are Fannie Eligible Homebuyers Mae eligible and meet CalHFA 's This program is available for both first-time master servicer, Lakeview Loan and non-first time homebuyers. Servicing's (LLS) guidelines. It is the responsibility of the lender and Homebuyer Education not the master servicer to meet these guidelines. Homebuyer Education counseling is required for one occupying first-time Additional Property Guidelines homebuyer. Homebuyer Education is not Accessory Dwelling Units (ADU), required for non-first-time homebuyer(s). Guest houses, granny units, and Online Homebuyer Education in-law quarters are eligible through eHome.

5 Must be zoned for Single Family Face-to-Face Homebuyer Education Occupancy through NeighborWorks America or Cannot be zoned for 2-4 units through one of the HUD approved HOUSING Counseling Agencies Must meet investor guide- lines and city/county zoning Owner Occupancy ordinances All borrowers must occupy the property as their primary residence within sixty (60) days of closing (continued on next page). 2018 CALIFORNIA HOUSING FINANCE AGENCY | ( ) 1. CalHFA CONVENTIONAL LOAN PROGRAM. Eligibility (cont.). Per investor guidelines If rental Lot size cannot exceed five (5). income from the ADU is used acres maximum for credit qualifying, CalHFA will Properties must meet the require- also use the gross rental income ments of Fannie Mae and the for the compliance income CALIFORNIA Health and Safety Code calculation Refer to the Lakeview program Leasehold Estates matrix for their Disaster Policy Must follow Fannie Mae See Lakeview Correspondent guidelines Lending website for details All Leasehold Estate documen- Escrow Holdbacks will be allowed tation must be submitted to for minor outstanding repairs not CalHFA 's Master Servicer with completed prior to loan closing purchase package for review and approval The Property must be habitable and safe for occupancy at the Community Land Trust (CLT).

6 Time of loan closing CLT loans will only be accepted Lenders and/or closing agent will from a CALIFORNIA Community be responsible for managing and Land Trust Network (CA CLTN). disbursing holdbacks approved lender Lender must deliver loans that Can be combined with either the were originated in accordance MyHome or the School Program with FHA and Fannie Mae MyHome and School Program guidelines loan amounts will be based Please see Lakeview Loan on the leasehold sale price, Servicing website for required including any enforceable documents restrictions on future re-sale prices Property Flipping All CLT documentation must be Follow the Fannie Mae first- submitted to CalHFA 's Master mortgage underwriting guidelines Servicer with purchase package for review and approval CalHFA requires a copy of all appraisals as required by Fannie Mae.

7 Must follow Fannie Mae guidelines When multiple appraisals are required, CalHFA will base the subordinate loan Manufactured HOUSING is not amount(s) on the lesser of the sales price permitted or lowest appraised value. Co-ops are not permitted Non-permitted additions/alterations must follow Fannie Mae guidelines (continued on next page). 2018 CALIFORNIA HOUSING FINANCE AGENCY | ( ) 2. CalHFA CONVENTIONAL LOAN PROGRAM. Eligibility (cont.). Lender Eligibility Requirements Genworth Mortgage Insurance To seek a Genworth Master Policy, To be eligible for this program lenders you may apply online must be approved by: CalHFA Broker Eligibility Requirements Fannie Mae or have access to HFA Mortgage brokers can find a list of partici- PreferredTM through a Desktop pating CalHFA -approved wholesale lenders Originator (DO) sponsorship on CalHFA 's mortgage broker webpage Lakeview Loan Servicing (LLS), CalHFA 's master servicer.

8 To seek LLS approval contact the the Counterparty Risk Management team at Underwriting & Compliance Transaction type to an additional fee. See CalHFA rate sheet for applicable fees. Purchase transactions only All Fannie Mae High Balance Loan fees Term will be net funded at the time of first mort- gage purchase by the master servicer. Up to 30 years Maximum LTV for Fannie Mae High LTV and CLTV Balance Loan Limits: Loan-to-Value (LTV) cannot Maximum Sales Price Limits exceed The Sales Price of the home cannot ex- Combined Loan-to-Value (CLTV) cannot ceed CalHFA Sales Price Limits for the exceed county in which the property is located. Additional subordinate loan(s) and grants may also be eligible to be layered with the Income & Sales Price Limits CalHFA Conventional loan.

9 The following reference materials disclose income and sales price limits by county: Maximum Loan Amount The maximum first mortgage loan amount 1. CalHFA Income Limits cannot exceed Fannie Mae loan limits. 2. Sales Price Limits Fannie Mae High Balance Loan Limits All loans with a loan amount exceeding $453,100 up to $679,650 will be subject (continued on next page). 2018 CALIFORNIA HOUSING FINANCE AGENCY | ( ) 3. CalHFA CONVENTIONAL LOAN PROGRAM. Underwriting & Compliance (cont.). Income Requirements 3. live in the residence being financed Lenders are required to calculate income to qualify borrower(s) for loan approval Due to federal regulations, CalHFA is re- using Fannie Mae guidelines; in addition, quired to compile all information regarding CalHFA will review the borrower's income borrower's income.

10 Pursuant to program compliance. Family income includes: QUALIFYING INCOME VS. PROGRAM. Gross pay Pensions COMPLIANCE INCOME. Overtime Deferred income Qualifying income is the income used by the lender to determine that the Bonuses Veterans borrowers have the ability to meet their Administration (VA). monthly obligation. Lender will continue Commissions compensation to adhere to the guidelines of their Part-time internal underwriting guidelines, mort- Gross rental or employment gage insurer, master servicer and this leased income program handbook. This income may Dividends Welfare payments differ from the income used by CalHFA . Interest for program compliance purposes. All Unemployment sources of income must be used to Annuities compensation determine program compliance income Child support Any regularly oc- limits.