CMG FHA Guidelines

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Corporate Headquarters: 3160 Crow Canyon Rd. Ste. 400, San Ramon, CA 94583

CMG FHA Guidelines: Wholesale & Select Partner

Loan Matrix ¨C LTV/CLTV & Minimum Credit Score ...................................................................................................................................................... 2

Program Details, Highlights and Overlays.................................................................................................................................................................... 3

Part A ¨C Borrower & Application .................................................................................................................................................................................. 9

Part B ¨C Property Ownership Restrictions .................................................................................................................................................................. 17

Part C ¨C Occupancy .................................................................................................................................................................................................. 19

Part D ¨C Underwriting Documentation........................................................................................................................................................................ 20

Part E ¨C Application ................................................................................................................................................................................................... 23

Part F ¨C Credit Analysis ............................................................................................................................................................................................. 27

Part G ¨C Evaluating Income ....................................................................................................................................................................................... 39

Part H ¨C Asset Assessment ....................................................................................................................................................................................... 63

Part I ¨C Liability & Debt Analysis ................................................................................................................................................................................ 71

Part J ¨C Property Eligibility ......................................................................................................................................................................................... 77

Part K ¨C Geographic Restrictions............................................................................................................................................................................... 89

Part L ¨C Disaster Policy ............................................................................................................................................................................................. 91

Part M ¨C Mortgage Insurance (UFMIP & Annual Premium) ........................................................................................................................................ 92

Part N ¨C Property Insurance ...................................................................................................................................................................................... 94

Part O ¨C Title Insurance ........................................................................................................................................................................................... 102

Part P ¨C Departing Residence Policy ....................................................................................................................................................................... 104

Part Q ¨C Transaction Types (Purchase and Refinances) ......................................................................................................................................... 105

Part R ¨C Secondary Financing ................................................................................................................................................................................. 130

Part S ¨C Interested Party Contributions (IPCs) / Financing Concessions / Sales Concessions ................................................................................ 131

Part W ¨C Temporary Buydowns ............................................................................................................................................................................... 132

Part X - Links to CMG Policies, FHA Resources, Etc. .............................................................................................................................................. 134

Part Y ¨C Product Codes / Terms / ARM Information ................................................................................................................................................. 135

Part Z - Recent Updates / 90 Day Lookback ............................................................................................................................................................ 137

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines

Handbook 4000.1: Updated: 06/25/2024

Click Here for Quicklink back to Table of Contents

Loan Matrix ¨C LTV/CLTV & Minimum Credit Score

Standard Loan Amounts & High Balance FHA Loans

No Cash Out Refinances

Purchase

FICO

Cash Out

Rate and Term

Simple Refinance

Streamline Refinance

600 Standard loan amounts 2

620 High Balance 4

600 Standard loan

amounts 2

620 High Balance 4

600 Standard loan

amounts 2

620 High Balance 4

600 Standard loan amounts 2

620 High Balance 4

600 Standard loan amounts 2

620 High Balance 4

96.50% 5

96.50% 1

80% Case numbers on

and after 9/1/2019

97.75%3

97.75%

97.75%3

97.75%

N/A3

none

LTV

CLTV

1. 110% CLTV permitted with the use of eligible DPA, not to exceed 100% "Cost to Acquire"

2. Credit scores from 600-619 permitted subject to meeting all the following requirements:

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TOTAL Scorecard analysis required (except Streamlines). Manual downgrades are allowed with Approve/eligible findings. "Refer" findings are permitted.

Non-traditional credit is not permitted except as outline in Credit Depth Policy.

SFR/Cond/PUD only (no multi units)

Standard loan amounts only. High balance loan amounts not permitted

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Cash out transactions require a second signature and the following: Max DTI 43%, No open collections/judgments, housing payment history

required 0x30x24.

For all transactions, borrowers must have a verifiable housing history or must demonstrate a regular savings pattern which demonstrates their financial maturity

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or require a CMG Level II second signature

Qualifying Ratios: Up to 31/43% no comp factors required, CMG requires that both AUS approved and manually underwritten loans meet HUD¡¯s Acceptable

Compensating Factors based on credit score and qualifying ratio.

Note: HUD Compensating factors can be located in Part F-8 ¨C Manual Underwriting and full details are in HUD Handbook 4000.1 Chapter 5.

3. FHA Maximum Loan Amount Calculation applies. HUD approved secondary residences are subject to additional restrictions.

4. All High Balance Loans: Maximum 0x30x12 mortgage history and must score Approve/Eligible (Streamlines okay to be manually underwritten: HPH applies)

5. Refer to CMG¡¯s FHA 203(h) Disaster Relief Guideline Addendum for transactions eligible up to 100% LTV.

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Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The

Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify

our state licenses, please log onto the following website: and

Page |2

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines

Handbook 4000.1: Updated: 06/25/2024

Click Here for Quicklink back to Table of Contents

Program Details, Highlights and Overlays

All CMG Financial Guidelines will follow FHA/Ginnie Mae Guidelines (the HUD Handbook) in addition to CMG Financial overlays, when applicable.

Topic

Eligible Terms

Eligible

Transactions

Escrows

Loan Amount

Limits

Non-Occupant

Co-Borrower(s) /

Cosigner

Details / Highlights / Overlays

Fixed: 15, 20, 25 and 30 year; ARM: 5/1 Arm, Margin 2%, Caps 1/1/5, Index based 1 Yr T-Bill (per WSJ)

Good Neighbor Next Door eligible for 15 & 30 year terms only. HUD REO w/ $100 Down eligible for 15 & 30 year terms only.

Note: Non-owner occupied Properties and HUD-approved Secondary Residences are only eligible for Streamline Refinancing into a fixed

rate Mortgage.

Refer to Part Y ¨C Product Codes, Terms, ARM Information for additional information.

Purchase, Rate & Term Refinance, Cash-out Refinance, Simple Refinance and Streamline Refinances permitted.

A Net Tangible Benefit Worksheet must be completed on all refinance transactions.

Section 203(h) transactions eligible as noted in CMG¡¯s FHA 203(h) Disaster Relief Guideline Addendum.

HUD REO Transactions permitted, including $100 Down, HUD Repo with Repair Escrow, and Good Neighbor Next Door.

Refer to Part Q ¨C Transaction Types ¨C Purchase transactions for additional details based on transaction type.

Tax and Insurance escrows are required on all FHA loans. Effective on loans closed on or after January 1, 2016 that require flood

insurance: the premiums related to the flood insurance must be escrowed - escrows for these premiums may not be waived, regardless of

LTV. If flood insurance premiums are paid by a condominium association, homeowner¡¯s association or other group, no escrow is

required. Note: CMG does not permit escrow for earthquake insurance.

Minimum Loan Amount: None. Maximum Loan Amount: as per HUD county loan limits

In addition, maximum loan limits vary by unit county and by State and County as determined by HUD:



With the exception of Streamlines without appraisals, the base loan amount (loan amount prior to UFMIP) may not

exceed the limits published by HUD.

For loans where a non-occupying borrower / cosigner is utilized the overall transaction ratios should generally not exceed 31/43 however,

higher ratios may be considered if the overall financial strength of the non-occupying coborrower / cosigner can be established.

Cash-out is not permitted.

Note: Non-occupant co-borrower / cosigner may not be an interested party to the sales transactions, such as property seller, builder, or

real estate broker. Refer to Part A-8 ¨C Non Occupying Borrowers & Cosigners for additional requirements, including LTV limitations.

Number of

Borrowers

There can be no more than 4 borrowers per loan.

Occupancy

Purchase, Rate/Term & Cash out: Owner Occupied, Primary Residence and HUD Approved Secondary Residences only.

Simple Refinance is only permissible for owner-occupied Principal or HUD-approved Secondary Residences.

Streamline Refinances permitted for owner occupied, HUD Approved Secondary Residences, and non owner occupied transactions.

Refer to Part C ¨C Occupancy for additional details.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The

Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify

our state licenses, please log onto the following website: and

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CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines

Handbook 4000.1: Updated: 06/25/2024

Click Here for Quicklink back to Table of Contents

Topic

Property Types

Qualifying Ratios

Refinance Streamline

Refinance ¨C

Cash Out

Secondary &

Subordinate

Financing /

Down Payment

Assistance

Underwriting

Details / Highlights / Overlays

1-4 Family Dwellings, PUD, Townhomes, Row homes, Modular, HUD Approved Condominiums. See ¡°Collateral¡± below for Ineligible

Property Types. Leasehold estates must meet all FHA/HUD requirements. Manufactured Homes are eligible as noted in the FHA/VA

Manufactured Home Addendum.

AUS approved loans max DTI is per AUS. Level I exception is required for all FHA Transactions with a qualifying credit score of less than

660 and ratios exceeding 37/47 (BOTH ratios exceed the numbers, not just one; i.e, a 39/50 requires Level 1 review, whereas a 39/43 does not)

Manual underwrites must meet all FHA requirements. (References: Chapter 5 of HUD Handbook 4000.1). Also, refer to Part F-8 ¨C Credit

Analysis ¨C Manual Downgrades/Manual Underwriting.

Non credit qualifying permitted; however, a Verbal Verification of Employment (VVOE) must be completed within ten (10) days prior

to the funding date. Refer to: Part Q-6 ¨C Transactions ¨C Refinances ¨C Streamlines.

? Refer to FICO/LTV Matrix for LTV restrictions and CMG minimum credit score requirements.

? 0x30 mortgage lates in the last 12 months.

? There is no limit to the maximum cash-out permitted.

? The Property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence

for the 12 months prior to the date of case number assignment.

Exception: In the case of inheritance, a Borrower is not required to occupy the Property for a minimum period of time

before applying for a cash-out refinance, provided the Borrower has not treated the subject Property as an Investment

Property at any point since inheritance of the Property. If the Borrower rents the Property following inheritance, the

Borrower is not eligible for cash-out refinance until the Borrower has occupied the Property as a Principal Residence for at

least 12 months.

? The Mortgagee must review the Borrower¡¯s employment documentation or obtain utility bills to evidence the Borrower has

occupied the subject Property as their Principal Residence for the 12 months prior to case number assignment.

Refer to: Part Q-3 ¨C Refinance ¨C Cash Out.

? CMG does not permit new subordinate financing with any refinance transaction.

? For Purchase transactions, maximum CLTV is 100% of the Cost to Acquire if the secondary financing is from a Government

Agency/HUD-approved Non-Profit considered in instrumentality of government. CMG will permit up to a max 110% CLTV based on

lessor of purchase price/appraised value for DAP's eligible be used to cover the borrowers minimum 3.50% down payment

requirement. The cost to acquire is defined as Sales Price + Borrower Paid Closing Costs + Discount Points + Pre-paid Expenses.

? Refer to Part R: Secondary Financing for additional guidance.

FHA Total Scorecard/AUS must be run; with the exception of Streamline Refinances (manual underwriting is required for all streamlines).

? High Balance Loan Amounts: AUS Accept Rating required; Refers are not permitted. Manual downgrades due to FHA / TOTAL

Scorecard requirements are eligible.

? Standard Loan Amounts: Generally, Refer/Eligible through TOTAL scorecard is permitted for BK, foreclosure, or erroneous

information only. Manual downgrades due to FHA / TOTAL Scorecard requirements are eligible.

For additional guidance on Manual Underwriting, refer to Part F-8 ¨C Credit Analysis ¨C Manual Downgrades/Manual Underwriting.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The

Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify

our state licenses, please log onto the following website: and

Page |4

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines

Handbook 4000.1: Updated: 06/25/2024

Click Here for Quicklink back to Table of Contents

Category

Topic

Ineligible Features

/ Programs

Program

First Time

Homebuyers

Good Neighbor Next

Door (GNND)

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Military Impacted Areas

Texas A6 loans

Rebuttable Presumption loans are not eligible

Section 32 loans are not eligible

Section 184

FHA Back To Work ¨C Extenuating Circumstances

MCC

203K Loans

Energy Efficient Mortgages (EEM)

Negative Equity Program

Weatherization financing (II.A.8.i)

Solar & Wind Technologies Financing (II.A.8.j)

? Loans to non-profit organizations

? HOPE for Homeowners

? Construction to Permanent (CTP) Financing where the

original note is modified is not eligible (II.A.8.g)

? Non-Arm¡¯s Length Transactions are generally not

allowed; to be eligible transaction must meet FHA

guidelines and must receive exception approval.

Bailouts not permitted.

? Dual roles on an FHA transaction are not permitted

except as outlined in Mortgagee Letter 2022-22 (An

originator cannot have another real estate related

position for any loan)

? Properties with individual water purification systems

are not eligible

Allowed.

Permitted. Refer to Part Q-1 ¨C Purchases ¨C HUD REOs - GNND.

Maximum # of

Financed Properties

For FHA Financing the borrower may generally only have one FHA loan. Multiple loans to FHA Borrowers not

permitted unless eligible per FHA Handbook 4000.1. Refer to section ¡°B-2 ¨C Multiple Financed Properties¡±

Multiple Mortgages

to Same Borrower

Borrowers are limited to three (3) loans or one million dollars ($1,000,000) total in loans funded/purchased by CMG,

whichever is less. Jumbo loans are excluded from loan amount limit, but still count towards the aggregate total of

loans with CMG. Refer to ¡°Part B-1 ¨C Multiple Loans to One Borrower¡±.

Power of Attorney

Assets

Details / Highlights / Overlays

Ineligible Asset

Types

CMG will not permit HUD exceptions for closing documents signed by an attorney-in-fact who is connected to the

transaction. Refer to Section A-9 for additional guidance and requirements.

? 1031 exchanges are not permitted and are ineligible as an asset type.

? Custodial Accounts for Minors; accounts that are in a minor's name where the borrower is the only custodian of

the funds are not eligible for closing costs, reserves or downpayment.

? Pooled Funds

? Mattress Money / Cash on Hand

? Sweat Equity

? Trade Equity

Refer to Part H ¨C Asset Assessment for additional information on eligible assets.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The

Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify

our state licenses, please log onto the following website: and

Page |5

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