In an effort to more closely align our lending guidelines with current agency requirements, Franklin American Mortgage Wholesale Lending has relaxed, and in many cases removed, overlays across our entire product portfolio. These new expanded guidelines allow our wholesale customers to more easily qualify borrowers and succeed in today's competitive marketplace.

The following overlay removals and guideline expansions apply to Conventional products:

  • HomeReady Minimum FICO Requirement: Revised the minimum required FICO from 640 to 620.

  • 97 Fixed Minimum FICO Requirement: Revised the minimum required FICO from 640 to 620.

  • Community Seconds: Expanded the Conventional secondary financing requirements to allow FAMC eligible Community Seconds on standard fixed products up to a maximum of 100% CLTV for eligible transactions. Previously, Community Seconds were only permitted on the HomeReady product.

  • Cash-Out Refinance for Investment Properties: Expanded the Standard Conventional products (excluding High Balance) to permit cash-out refinance transactions on investment properties. The maximum LTV/CLTV/HCLTV will be the lesser of the program requirements per the FAMC Product Description or 70%. Investor cash-out refinance transactions were not permitted prior to this expansion.

  • Condominium Investment Properties: Expanded the Conventional Condominium parameters to permit investment condos on the Standard products (excluding High Balance). The maximum LTV/CLTV/HCLTV will be the lesser of the program requirements per the FAMC Product Description or 70%. Investment condos will continue to remain ineligible in the state of Florida. Non-owner occupied condos were not permitted prior to this expansion.

  • Construction-to-Permanent – Property Eligibility: Removed the restriction that only 1-unit properties are eligible for construction-to-permanent financing. 1-4 unit properties are now eligible per standard agency requirements.

The following overlay removals and guideline expansions apply to multiple products:

  • FHA Minimum FICO Requirements: Revised the minimum FICO requirements for FHA loans as follows:
    • FHA Standard Products: 620 minimum FICO for all transaction types
    • FHA Jumbo Product: 640 minimum FICO for all transaction types

  • FHA Mortgage Payment History Requirements: Removed the mortgage payment history requirement where a borrower is limited to a 1 (x) 30 day late payment to more closely align with Total Scorecard and the FHA Handbook. This applies to both Standard and Jumbo products.

  • FHA Streamline Refinance Payment History Requirements: Revised the mortgage payment history requirements for Streamline Refinance transactions to remove the requirement for a 0 (x) 30 mortgage payment history in the last 12 months to align with the FHA Handbook which requires 0 (x) 30 in the last six months prior to case number assignment date for non-credit qualifying transactions.

  • FHA Streamline Refinance – 2-4 unit properties: Removed the requirement that a streamline refinance on a 2-4 unit property must be currently serviced by FAMC. Streamline Refinance transactions are now permitted on 1-4 unit properties regardless of the servicing lender for standard loan amounts, and are allowed on 1-2 unit properties for FHA Jumbo

  • FHA Non-Occupant Co-Borrowers: Removed the restriction that non-occupant co-borrowers are only permitted on 1-unit properties. Non-occupant co-borrowers are now permitted on 1-4 unit properties per the requirements in the FHA Handbook.
  • USDA-Projected Income: Removed the restriction that projected income is not permitted. Projected income may be used per the requirements in the USDA Handbook as long as the employment is not from a family member or an interested party to the transaction.
  • VA Debt-to-Income Requirements: Revised the maximum DTI for VA loans. Loans with FICOs less than 640 have a maximum DTI of 50%. The previous requirement was loans with FICO scores less than 650 were limited to a maximum DTI of 45%.

  • VA Cash-Out Refinance: Guidelines have been expanded to align with VA by allowing cash-out to 100% LTV/CLTV/HCLTV. This applies to both the Standard and Jumbo products with no additional FICO restrictions. With the exception of transactions in the state of Texas, the maximum amount of cash to the borrower(s) at closing is unlimited on the Standard product and remains at $325,000 on the Jumbo product. The previous requirement limited cash out to 90% for standard and Jumbo products. For standard loan amounts only, LTV’s greater than 90% limited the cash out to only allow payoff of liens and documented consumer debt; cash back was limited to $500 and also required a 680 minimum FICO.

  • VA Minimum FICO Requirements: Revised the minimum FICO requirements for VA loans as follows:
    • VA Standard Product: 620 minimum FICO for all transaction types
    • VA Jumbo Product: 640 minimum FICO for all transaction types, regardless of loan amount.
    Previously, VA Standard IRRRLs required a 640 minimum FICO. The Jumbo product required a 680 minimum FICO up to $700,000, and a 700 minimum FICO for loan amounts above $700,000.

  • VA Mortgage Payment History Requirements: For standard VA purchase and refinance transactions (excluding IRRRLs), removed the requirement where the borrower is restricted to no more than a 1 (x) 30 day late payment in the last 12 months. For Jumbo loan amounts, the 0 (x) 30 mortgage payment limitation has been removed. Refinances with loan-to-value (LTV) > 90% will require a minimum of 0 (x) 30 in the last six months. This applies to both Standard and Jumbo products.

  • VA IRRRL Mortgage History Payment Requirements: Revised the requirements for mortgage late payments on IRRRLs to 0 (x) 30 in the past six months; previously this was 0 (x) 30 in the last 12 months.

  • VA Number of Financed Properties: Removed the restriction that required the borrower be limited to a total of four financed properties for VA Standard product and the restriction for only one additional financed property for VA Jumbo.

To learn more about our new expanded guidelines, contact your Account Executive or call 800-295-1020.

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