The Australian Government has outlined the First Home Loan Deposit Scheme to support first home buyers who are struggling to save the large deposits (usually around 20% of purchase price) required to buy a house.

The First Home Loan Deposit Scheme is similar to an existing policy of the New Zealand Government, the Welcome Home Loan. Under this NZ loan scheme, a household obtains a loan from a participating bank or other lender and Housing New Zealand underwrites the loan. Householders need a 10 per cent deposit; can buy a house that costs no more than the maximum price for each region; and have an annual income before tax of no more than $85,000 per year for a single person and $130,000 for a couple.

The Australian First Home Loan Deposit Scheme has different eligibility restrictions, including a lower 5 per cent deposit requirement; higher annual income cut offs of $125,000 for a single person and $200,000 for a couple; and a cap of a maximum 10,000 first home buyers being able to access the scheme each year.

Other low-deposit loan schemes already exist in two Australian states: Keystart (in Western Australia) and HomeStart (in rapidloan.net/installment-loans/ sign in South Australia). These programs were established by the state governments in response to the lack of affordable finance options for low income home buyers. Keystart and HomeStart home loans are secured by their respective state governments, with both organisations paying a dividend back to their state government.

Keystart and Homestart both have strict eligibility requirements. For example, to be eligible for a home loan with HomeStart you must:

• have a regular income, which can include centrelink benefits
• be over 18 years of age
• be an Australian citizen or hold Permanent Residency or skilled migrant status in Australia
• be purchasing an established home within South Australia to live in (i.e. with restrictions to not rent out at any time in the future)
• have a clear credit history
• have $3,000 of savings held for at least three months, have no paid or unpaid defaults, court judgements or history of bankruptcy.

Eligible home buyers only need a deposit that is three per cent of the purchase price, although this depends on where the property is located. Lenders’ Mortgage Insurance (LMI), which is paid to protect lenders in case the borrower defaults on their loan, is not required, instead HomeStart has a Loan Provision Charge (LPC), which costs significantly less for most customers. HomeStart suggests that for a $380,000 loan on a $400,000 property (being a loan of 95% of the home’s value), customers would pay $1,425 for the LPC rather than around $13,5000 for LMI.

Interest rates (in May 2019) for a 3 year fixed rate HomeStart loan are 5.43% (comparison rate). As a comparison, a 3 year fixed rate loan from a major bank requiring a much higher 20 per cent deposit was 4.98% (comparison rate). A comparison rate includes the interest rate as well as certain fees and charges relating to the loan.

The benefit of a HomeStart loan is that it can get lower income households into the property market and then, once they have built up sufficient housing equity (e.g. greater than 20% of house value), they are encouraged to apply for a loan (at a lower interest rate than that offered by HomeStart) from a bank or building society and pay out their HomeStart loan.

The Keystart Low deposit home loan (comparison rate 5.43%) imposes eligibility restrictions on the maximum income householders can earn, and places a cap on how much householders are able to borrow. No government subsidies are made to Keystart and it has not required ongoing government financial assistance.

As with HomeStart, required deposits are much lower than is necessary for banks and building societies, and the LMI is not charged. The deposit required by the Keystart Low deposit home loan is: up to $480,000: 2% deposit; $480,001 – $500,000: 5% deposit; and $500,001 – $650,000: 7% deposit.

VA Foreclosure Guidelines requires a two-year waiting period after a housing event to qualify for VA Loans.VA Foreclosure Guidelines is less strict than other loan programs.

• A housing event is a foreclosure, deed in lieu of foreclosure, or short-sale
• HUD, the parent of FHA, requires a three-year waiting period after a housing event
• Fannie Mae and Freddie Machave a four-year waiting period after a short sale or deed in lieu of foreclosure and a seven-year waiting period after a standard foreclosure
• NON-QM Loans does not have any waiting period requirements after a housing event
• However, non-qm loans do require a 10% to 20% down payment requirement

In this blog, we will discuss VA Foreclosure Guidelines and qualifying for VA Loans after a housing event.

VA Foreclosure Guidelines On Buying A Home After Housing Event

VA Foreclosure Guidelines mandates a waiting period after the foreclosure, deed in lieu of foreclosure, short sale to qualify for a VA Loan.

• Unlike other loan programs, VA Foreclosure Guidelines makes it able for borrowers to qualify for a VA Loan just two years after a housing event
• FHA and USDA require a three-year waiting period
• Conventional loans require a four year waiting period after a deed in lieu of foreclosure and/or short sale and 7 years after a foreclosure

Whether you have defaulted on a VA Loan or other loan program, the waiting period to qualify for a VA Loan after a housing event is a two-year waiting period.

VA Home Loan Eligibility Requirements

VA Loans is the best owner-occupant home mortgage program in the United States.

• Our government created and launched VA Loans through the U.S. Department of Veterans Affairs (The VA) to reward our active and retired members and eligible surviving spouses of our Armed Services
• VA does not require any down payment
• Eligible veterans with a valid Certificate of Eligibility (COE)are eligible to purchase a home with a VA Loan with 100% financing
• There are no minimum credit score requirements or debt to income ratio caps on VA Loans
• Loan Limits on VA Loans is capped at $484,350
• Loan limits are higher on high-cost areas
• The VA has lenient credit and income lending guidelines than other loan programs

The VA understands that veterans can have lower credit profile than their civilian counterparts due to being deployed or being transferred to other stations year after year. Gustan Cho Associates has no overlays on VA Loans.

Qualifying For A VA Loan After A FHA And/Or Conventional Loan Foreclosure

Homeowners who had a prior foreclosure on a non-VA Loan such as a conventional or FHA Loan, there is a two-year waiting period to qualify for a VA Loan.

• Borrowers can qualify with their full VA entitlement on a new VA Loan with a prior foreclosure https://rapidloan.net/installment-loans/ with a mortgage that was a conventional or FHA Loan
• There is only a one-time entitlement on a VA Loan

So as long as the foreclosed loan was not a VA Loan, the borrower will have their full VA entitlement.

VA Foreclosure Guidelines In Getting A New VA Loan After A Prior VA Loan Foreclosure

Defaulting on a prior VA Loan may affect getting a new VA Loan after a foreclosure.

• There is a two-year waiting period to qualify for a VA Loan after a foreclosure
• However, if the prior foreclosure was on a VA Loan, borrowers may have limited VA entitlement on their new VA Loan
• New home buyers need to determine how much VA Loan Entitlement they have left if they foreclosed on a prior VA Mortgage
• Borrowers need entitlement every time they are purchasing a home with a VA Loan
• Every time a borrower defaults on their VA Loan, they lose the VA entitlement they utilize in purchasing their home
• They can regain their VA entitlement if they repay the VA in full
• However, the chances are that the veteran did not use their full entitlement on their foreclosed VA Loan
• Most borrowers will have enough VA entitlement to qualify for another VA Home Loan after a prior VA Loan foreclosure

One of our experienced loan officers can go over the veteran’s Certificate Of Eligibility (COE) to determine how much entitlement they have left and whether or not it is sufficient to qualify for another VA Loan.

Qualifying For A VA Loan After A Housing Event With A Direct Lender With No Overlays

Gustan Cho Associates at Loan Cabin Inc. is a nationally recognized 5-star direct lender with no overlays on VA Home Loans. If you are looking for an aggressive direct lender with no overlays, please contact us at 262-716-8151 or text us for faster response. Or email us at [email protected] We are available 7 days a week, evenings, weekends, and holidays.