Minnesota Housing has announced some changes to their programs. One of the changes that will help people affects the pricing for MN Housing loans. Both FHA and conventional loans will now give you a choice between a 1% origination fee and no origination fee- the difference is in the interest rate. With a 1% origination fee, the rate will be a bit lower – typically .125-25% lower than those without the origination fee. This way you can choose between lower closing costs or a lower rate. Talk to your loan officer and decide which way is better for you. One of the main decisions will be based on how long you think you will keep this home.
Fannie Mae made some changes to their Home Ready program and that allowed MN Housing to make changes to the HFA preferred programs. Those that are looking to use the Step Up program to purchase another home may have ownership interest in another home. In the past you could not own another home and purchase a new one using these programs. Now you can keep your current home and buy a new home using the Step Up program as long as you use the HFA preferred or HFA preferred Risk Sharing options. If you are buying a home and want to use the Start Up program, you may have ownership interest in a property, but you cannot have lived in the homefor the past three years. So if you have an interest in a cabin or maybe you have a home you have rented out for the past three years, you can still qualify for the Start Up first time homebuyer program. You will have to prove that you have lived in another home for the past three years.
MN Housing will also allow borrowers to go up to a 50% debt to income ratio with the HFA preferred program if their credit score is 660 or higher. For those with a 640 credit score, the max DTI is 45%. MN Housing had a minimum credit score of 660 until this update for conventional loans. FHA still requires a minimum 660 credit score, VA and RD loans may go to 640. All these loans will need to be run through an automated underwriting system.
Each lender that offers MN Housing loans has the option to put overlays on these requirements. We may see lenders keep the 660 credit score requirement and they may also keep the 45% debt to income requirement. You will want to check with your loan officer to see if they can offer the lower credit scores. It may also be on a case to case basis, depending on the individual loan.