VLT Training

May 2, 2023

Training Day #8

Training Day 8: Building W-2 Loans

Introduction

Welcome to Training Day 8 of the Boots 2 Loans program. Today, we will focus on building various types of loans for W-2 borrowers, including FHA, conventional, USDA, and jumbo loans. We will discuss the unique features and requirements of each loan type and guide you through the process of creating tailored loans for W-2 borrowers.

Understanding W-2 Borrowers

W-2 borrowers are individuals who receive a regular salary or wages from an employer and report their income on a W-2 tax form. These borrowers typically have a stable and verifiable income source, making them attractive candidates for mortgage loans.

Building FHA Loans for W-2 Borrowers

FHA loans are government-backed loans insured by the Federal Housing Administration (FHA). They are designed for borrowers with lower credit scores and require a minimum down payment of 3.5%. When building an FHA loan for a W-2 borrower, consider the following:

  • Verify the borrower’s employment and income using their W-2 forms and pay stubs.
  • Calculate the borrower’s debt-to-income (DTI) ratio and ensure it meets FHA guidelines.
  • Ensure the property meets FHA’s minimum property requirements.

Building Conventional Loans for W-2 Borrowers

Conventional loans are not backed by the government and typically have stricter credit and income requirements than FHA loans. When building a conventional loan for a W-2 borrower, consider the following:

  • Verify the borrower’s employment and income using their W-2 forms and pay stubs.
  • Calculate the borrower’s debt-to-income (DTI) ratio and ensure it meets the lender’s guidelines.
  • Determine the appropriate down payment amount, typically between 3% and 20% of the home’s purchase price.

Building USDA Loans for W-2 Borrowers

USDA loans are government-backed loans designed to promote homeownership in rural areas. They offer 100% financing and have income restrictions based on the borrower’s location. When building a USDA loan for a W-2 borrower, consider the following:

  • Verify the borrower’s employment and income using their W-2 forms and pay stubs.
  • Calculate the borrower’s debt-to-income (DTI) ratio and ensure it meets USDA guidelines.
  • Confirm the property is located in an eligible rural area.

Building Jumbo Loans for W-2 Borrowers

Jumbo loans are loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). They typically have stricter credit and income requirements than conforming loans. When building a jumbo loan for a W-2 borrower, consider the following:

  • Verify the borrower’s employment and income using their W-2 forms and pay stubs.
  • Calculate the borrower’s debt-to-income (DTI) ratio and ensure it meets the lender’s guidelines.
  • Determine the appropriate down payment amount, typically at least 20% of the home’s purchase price.

Conclusion

Today’s training has provided an overview of building various loan types for W-2 borrowers. As a Mortgage Loan Originator, you will use this knowledge to help borrowers navigate the mortgage process and obtain the right loan for their financial situation. By understanding the unique requirements and features of each loan type and tailoring loans to suit W-2 borrowers, you will be better equipped to serve your clients and help them achieve their homeownership goals.

Christopher Andaya