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Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

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Calidreaming
Regular Contributor

Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

After months of research and prep, I finally went ahead and submitted a mortgage for NFCU's HBC 0% down mortgage.  The people who posted about their experiences with this mortgage were very helpful to me, so I thought I'd also post to help people who might be interested in this loan.

 

My credit:  High score is Experian at 726+ and mid score is EQ at 665.  I didn't bother checking TU since it's always been my lowest score.  My only blemish is a 3 year old redeemed repo which has been keeping my mortgage scores down.  My FICO 8 scores are all in the mid 700s.  My utilization on credit cards is less than 10%.

 

I am a little worried about a few things apart from my credit score.  I am married but applying by myself on the mortgage.  My hubby is self-employed and he aggressively claims losses to minimize taxes.  I get 1099 income from his company, so I'm hoping that doesn't sink things although the income is properly documented.

 

Another thing I'm worried about is that I have $114K in student loans.  I'm currently on an IBR plan where I have to pay nothing on it.  The standard repayment would be $563 but I've heard that some loan officers don't know how to handle the new rules on how to treat those.  If they insist on counting the 1% of my loans for DTI purposes instead of $563, this will keep us from being able to afford a home in our area.

 

Yet another issue we may have is that we have young dependents and child care costs are more than the mortgage that we're trying to get.  I put down my costs as 0 since I plan on saying that my husband will be responsible for child care.  I hope this is sufficient. 

 

Assets:  I have a pension and 401(k), but not much in bank accounts right now.  I have a few joint accounts with my husband.  The down payment money is going to come from the large tax return we should be getting back.  If they require some reserves other than a 401(k) and pension, then that may cause problems.

 

So I will enjoy the holidays and hope that we get some good news next week!

 

29 REPLIES 29
Anonymous
Not applicable

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Hi,

 

I have high student loans too and have been researching how to go about buying a home. What I have found is that a conventional is the best option since they use the credit report payment for the DTI rather than the 1% that FHA will use. If your credit report shows $0 then you will be defaulted to the % of balance method. I am sure the loan officers will contact you and go over the options with you though. As well as the folks here will respond with good advice on how to proceed.

 

Hope this helps. Happy Holidays!!!

Message 2 of 30
cammyspot
Valued Member

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

I am a member of NFCU too and I have been looking for any recent posts about people applying for the Homebuyers Choice Mortgage. I would like to do so as well before my apartment lease expires next Aug. I also have about 92K in school loans and on track to have these tackled in full with the Loan Forgiveness Program. My monthly IBR payment is $263. Let us know any updates. thanks. 

Starting Score: Jun 2012 TU 564 FAKO

Current Score:10/25/17 Fico 08 EQ 673, TU 647, EX 671

First Goal: 700's across the board

Message 3 of 30
Anonymous
Not applicable

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Hi there, just saw this thread and figured I'd shed some insight since I'm in the middle of the process!

 

I am currently in escrow as a first time home buyer using Navy's 100% Jumbo HBC program. We are days away from removing all contingencies. I too have student loans, below are some details people on here may be interested in. I'll stress though that this is how they handled my case, I cannot claim this is how they handle everyone's, but from what I heard from the originator most of these are pretty standard.

 

Middle FICO Mortgage score:

720 (literally the minimum required to get their best rate. whew...)

 

Closing Costs:

1.75% funding fee + 1% origination fee + other typical costs (appraisal, insurance, title fees, etc)

 

Reserve Requirements:

12 Months, retirement accounts may be used in this calculation.

 

Student Loan Calculation:

1% of owed amount, or current payments, whichever is greater.

 

Income Calculation:

This is an interesting one, since I have a mix of W2 and 1099 income. They used my current verified employment (W2) income, and the average 1099 income I reported the last two tax returns. In my case, I showed a negative 1099 income, so they ended up subtracting from my W2 for the grand total. Not the way I had hoped they would calculated this, but it ended up being fine for the amount we need to borrow.

 

Maximum DTI:

Up to 45% in our case. I was told credit score did not factor into the cap.

 

 

Hope this helps any prospective buyer shopping for a NFCU 100% HBC loan, good luck! Our process has been incredibly smooth to date.

 

 

Message 4 of 30
cammyspot
Valued Member

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Thanks for the update!  What do you mean by 'reserve requirements' exactly? 

Starting Score: Jun 2012 TU 564 FAKO

Current Score:10/25/17 Fico 08 EQ 673, TU 647, EX 671

First Goal: 700's across the board

Message 5 of 30
Anonymous
Not applicable

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Not a problem! Reserve requirements are funds you must have available to make a certain amount of payments (lets say in a situation you lost your job and had to keep paying your morgage). For example, if you total mortgage (PITI) is 5000 per month, and you were required to have 12 months of reserves, you would need to prove to your lender that you will have $60,000 in your bank after all closing costs are accounted for. If you don't have cash in the bank to cover this, most lenders will let you use a certain percentage of your retirement accounts to count toward the reserve requirements. The logic being, your retirement account may show a certain amount, but the amount you can actually use to make a payment on your home after paying early withdrawl penalties and taxes is much less. Stocks can be used as well usually.

 

Either way as a result, a 100% financing HBC typically still requires you have a good chunk of money/assets saved to qualify. Hope that helps.

 

*edit* Don't quote me on this, but I believe you only need 6 months of reserves for a 100% HBC conforming (non-jumbo) loan.

Message 6 of 30
cammyspot
Valued Member

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Awesome, thanks for the insight, I feel smarter already. 

Starting Score: Jun 2012 TU 564 FAKO

Current Score:10/25/17 Fico 08 EQ 673, TU 647, EX 671

First Goal: 700's across the board

Message 7 of 30
BlueHusky
Contributor

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Helpful info. Thanks! Question about the 1% or whichever is greater calculation for student loans. So you're saying if you already have a student loan set up for repayment they will IGNORE the payment and make one up? 1% repayment is a 10 year repayment term basically. I have 1 student loan set up on a 30 year repayment at $250 per month. The total balance is 45,000. Are you saying they are going to count it as $450 per month even though my ppaymentis only $250? I don't get it.



Starting Score: 583 (CreditKarma, 2009)
Current Score: 783 (Walmart Free FICO, March 20, 2012), 774 (Equifax, BoA Pull, 2/20/13)
Goal Score: 800+


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Message 8 of 30
Calidreaming
Regular Contributor

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Just want to clarify that there is no reserve requirement for non-jumbo loans under the First-time HBC mortgage program.

Also for student loans they will use the monthly payment as long as it fully amortizes the loan. The 1% rule comes into play where you have an income-based repayment plan or other payment that will not fully repay the loan over the life of the loan. I should find out soon how Navy Federal handles it, but other lenders allow you to provide documentation from you student loan lender of what a fully amortizing payment would be if you're on an income-based plan.

People who have large student loans will generally be better off using a payment that amortizes the loan instead of 1% of the balance since you can usually extend repayment over 30 years. People who have smaller loans might be better off using 1% of the balance.

BlueHusky, they will use your $250 payment because that is an amount that will amortize the loan over the 30-year term.

Message 9 of 30
BlueHusky
Contributor

Re: Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

Calidreaming, thank you for that info. You said the conforming has no reserve requirement. The jumbo through does requires 12 months?



Starting Score: 583 (CreditKarma, 2009)
Current Score: 783 (Walmart Free FICO, March 20, 2012), 774 (Equifax, BoA Pull, 2/20/13)
Goal Score: 800+


Take the FICO Fitness Challenge
Message 10 of 30
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