Home Buying in Vista>Question Details

elv1986, Home Buyer in Vista, CA

5% Conventional Loan Requirements HELP!!!!

Asked by elv1986, Vista, CA Thu Aug 30, 2012

My boyfriend and I are trying to purchase a home. For what we can afford, a 5% loan is going to be our best option, but the homes we can afford (with what we like) are in San Diego. It seemed at first that the biggest requirements were job stability and credit, which we both have. My job requires for me to often travel into SD, while my boyfriend would have to commute, because at this time the field he works in does not have anything available in SD. Now we are being told that in order to be approved, he needs to work in San Diego County, which doesn't make sense because he can commute. Is this a requirement in all 5% down payment conventional loans? It seems a little strange...

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You have received good advice here. Go talk to some loan officers in person to see what they can offer. If you persist, you will find someone that will help you. Get preapproved before you ever look at homes. Talk to fiends/coworkers to find lenders via referral.

Best of luck,

Mark & Kari Shea
Shea Real Estate
Serving Greater San Diego
0 votes Thank Flag Link Thu Aug 30, 2012
I can see there being some questions raised if your current residence and places of employment are out of SD county and you're now looking to buy an owner occupied home in SD county. But if your boyfriend's future commute is a reasonable one and your employment already takes you to SD it shouldn't be a problem. A good letter of explanation should take care it.

David Hughson
Mortgage Planner & RE Consultant
The GreenHouse Group
591 Camino de la Reina Ste. 103
San Diego, CA 92108
off 858-863-0264
fax 858-863-0274
DRE Lic. #01391065 / NMLS #322637
0 votes Thank Flag Link Thu Aug 30, 2012
OK, after reading some other responses, I can explain a little further.

In this case what the underwriter would be concerned with is your occupancy. Rental properties are considered more "risky" than owner occupied properties, because they figure that a rental property would be let go before an owner occupied property in the case of a financial hardship.

In lending, "risk" equals slightly higher rates.

So, as you will understand, there are a lot of people that try to buy rental properties with owner occupied loans.

So, in your case, the concern would be that somehow you are buying a rental property, but trying to get owner occupied rates. Thats not a personal attack on you, that is a very general guideline issue that applies to everyone.

So, to solve your problem, I would have you write a detailed letter of explanation explaining WHY you were interested in living in that particular location, and what the plan is with the commuting, job situation, etc. I have done a TON of these like this. Its really not common for people to live in Temecula and commute to downtown San Diego, or even the border! Similarly, it is not uncommon for someone to live in San Diego and commute via the coaster to Orange County or even L.A.

So occupancy is your issue, and a Letter of Explanation is your answer.

0 votes Thank Flag Link Thu Aug 30, 2012
Uncommon. Its not uncommon. Sorry.
Flag Thu Aug 30, 2012
Whoever is telling you that he has to work in S.D. county is incorrect. As long as you can justify the ability to commute, you should be just fine.

Call me if you need any more info.

0 votes Thank Flag Link Thu Aug 30, 2012
This is not odd at all. The fear is, especially in this conservative mortgage envioronment, is using a high risk, low down owner occupied home loan for the purchase of a rental property that requires a much bigger down payment.

That is the reason for the work location approval condition. True, you can commute to and from and you can work the cost of the commute into loan approval process. However, more than likely not on a conventional loan.

You might research this yourself on efanniemae.com of Freddit Mac's version on underwriting guidelines but know that most all lenders not selling directly to Freddie or Fannie are adding their own set of credit underwriting overlays. Some lenders call them "credit enhancements"...

Owner occupancy is the key to low down home loans and if there is any question or doubt on this and there is here in your casse it seems, you have many obstacles to overcome to proof it is truly owner occupied.
0 votes Thank Flag Link Thu Aug 30, 2012
That is a little strange. I advise all my clients to speak to more than one lender when thinking about purchasing a home. I work with a great girl that I can refer you to for a second opinion. Feel free to contact me directly and I will send you all her contact info.

Sinead McAllister
McAllister Homes Real Estate
0 votes Thank Flag Link Thu Aug 30, 2012
This does sound odd.
Was that file actually underwritten? Or was that the opinion of the lender?
I am finding that some real estate agents and loan officers do not want to work with low down payment buyers....any excuse to push you off.
We can do your loan. Happy to help. cg
0 votes Thank Flag Link Thu Aug 30, 2012
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