Oklahoma Community Home Buyer (CHB) 97%
is a conventional fixed rate home loan
that is designed to assist first time home buyers with
flexible mortgage qualifying terms. The loan is a fixed
rate mortgage in which the monthly payments remain the
same over the life of the loan. Once the mortgage is in
effect, the interest rate does not fluctuate but remains
The 30 year
fixed rate loan is one of the most commonly used mortgages
for residential financing in America. The greatest advantage
for a home buyer is the predictability of the payments
each month because it never changes. This type of loan
is often recommended for home buyers living on a fixed
income, a set budget, or those planning on living in their
home for more than five years. If interest rates increase,
the loan rate will remain the same. Unfortunately should
rates decline below the set interest rate on the loan,
the only way to change it is to refinance the mortgage
and incur a loss of equity or additional closing costs
to take advantage of the lower interest rate.
The major difference
between the CHB 97 and other conventional home loans is
the reserve requirement. The CHB 97 only requires a 1
month cash reserve. Also, the CHB 97 limits the borrower's
income to 100% of the median income for the area.
are highlights of this loan program:
Requirements: The minimum down payment required for
this type of loan is 3% of the sales price for owner-occupied
employment: The borrower's income is limited to 100%
of the median income for the area. As for employment,
there are no limitations on a specific length of time
at a particular job. However, a 2 year history is required,
preferably in the same line of work (education can be
counted towards this 2 year history if it is for the same
profession the borrower is currently in).
properties and occupancy requirements: Single family
attached and detached homes, 2 to 4 unit properties, planned
urban developments (PUDs), and Fannie Mae or Freddie Mac
approved condominiums. Second homes and investment properties
are not eligible under this program.
Costs: Closing costs and prepaids may be paid by interested
parties (i.e. seller) as long as they are considered in
the contribution limitation. For primary residences, the
seller may contribute up to 3% of the sales price if the
buyer is putting less than 10% down. If the buyer is putting
10% or more down, the seller may contribute up to 6% of
the closings costs.
This type of loan is not assumable.
Penalty: Not applicable.
The borrower is required to have a minimum of one month
cash reserves in the bank by the close of escrow.
Gifts are allowed from a relative, church, municipaility,
or a non-profit organization.
Generally Fannie Mae and Freddie Mac require a minimum
credit score of 620.
(Non-Occupant Co-Borrowers): Not allowed.
Ratios: Fannie Mae and Freddie Mac limit a borrower's
monthly payment not to exceed 28% of their gross monthly
income. A borrower's total debt (proposed monthly payment
plus monthly payments towards credit cards, student loans,
car payments, and other installment and revolving credit)
cannot exceed 36% of their gross monthly income. If compensating
factors are present or if the borrower has an above average
credit score, the stated ratios may be exceeded.
Insurance: Required for all purchases with a down
payment less than 20% of the purchase price.