In order for a "vehicle" (RV, boat) to be considered a second home for tax purposes It must have a designated sleeping area, kitchen area for food prep/cooking, and bathroom facilities.
For financing on a home above 80% of the value with a conventional loan, lenders require you to purchase a monthly insurance policy to cover THEM against loss, It's called PMI (Private Mortgage Insurance). It's designed to pay off the balance of the loan above the 80% value if they have to foreclose on the home and auction/sell it for below the outstanding loan balance. If it sells for more than the loan balance, the net proceeds go to the owner/person who got foreclosed on(rarely happens). Typically the maximum conventional loan amount here is 95% of the property appraised value. FHA loans also require PMI and you can finance up to 97% of the value. With a conventional loan, you can petition the lender to remove the PMI requirement after 2-3 years or after the home can appraise high enough to get the LTV (Loan To Value) under that magical 80% mark. With an FHA loan, you have PMI for the entire life of the loan, it can not be removed. Then there is the VA loan program which will finance up to 100% of the property value with NO PMI. They do however charge additional points as a cost of doing the loan if you go above 90% LTV, called a VA Funding Fee. They do give a waiver to disabled vets where they don't need to pay any VA funding fee.
There are still alternative financing options out there to do limited documentation or even no documentation loans, but the rules have been tightened substantially since the mortgage crash. They typically require substantial down payments and excellent credit.
Typically (FHA and VA have some latitude here based on the "overall strength" of the loan request) home financing will require at least 4 lines of credit, 1 of which must have a minimum of a 2 year payment history. Ideally lenders are looking for a mixture of credit types to include a car loan, major credit card, store credit card and possibly a bank line of credit. Not all 4 lines can be store credit cards. For a mortgage loan, all lenders are going to pull a tri-bureau merged report... a report including all 3 major credit bureau's records on you. For revolving credit, typically the lender will only pull one bureau. Every time you request credit and you report is pulled, it dings 3 points off your score with the exception of searching for a loan to buy a car, but those credit pulls must all have happened within a 7-10 day period to count as one pull. Your score is dinged if you have too much credit, have recently applied for multiple new credit lines (within the past year), if you have borrowed more than 25-50% of the available credit you've established (maxed out cards, etc.)
A smart mortgage lender will TELL you; do NOT apply for any new credit until AFTER you have closed on the house. Many lenders WILL pull a credit check right before closing to ensure the borrower hasn't dug themselves a hole. You would be amazed at how many folks get into the process to buy a home and feeling like they own the world since they are "approved" for the loan, go out and buy a new car (screwing up their DTI - debt to income ration). Another good one is to tell their boss to pack sand and quit their job right before closing (lenders typically do a verification of employment right before closing). On that, conventional lenders are ALSO looking for a 2 year, unbroken employment history in the SAME line of work.
The other big thing is DTI. For conventional financing they are looking for total DTI below 30-35% The total monthly payment on all present credit lines + anticipated mortgage payment (PI only, not including taxes and insurance) with the mortgage ideally being <28% of the total. there is some latitude with substantial down payments and excellent credit... virtually no latitude with weak credit and low down payment. With FHA and VA there is much more wiggle room and they will allow up to 40-45% and in some cases even as high as 50% DTI depending on circumstances and overall strength of credit profile and expected ability to pay back the loan. A single person with excellent credit history/score & minimal outstanding credit debt and a stable income source will have a much better success ratio getting approved for a 50% DTI loan than a young married couple with multiple kids living paycheck to paycheck with marginal credit.
Typically for conventional financing, the credit score requirements start @ ~680 with 20% down and increase in requirement with decrease in down payment amount. For a 95% loan, most lenders want 740+ scores. FHA/VA loans will allow credit scores as low as 580 with exceptional documentation explaining why it's so low, but they prefer 620+. For example if the borrower was forced into credit difficulties because of medical bills/issues. If you have a foreclosure on your credit report, it must be more than 2 years past and you must have re-established a good 2 year credit history. If you've declared bankruptcy, even though all non active credit lines must be deleted after 7 years, foreclosures and banruptcies stay on the report for 10 years. If you have ever applied for "credit counseling" virtually all lenders will treat that as a bankruptcy since you have sought help because you have established bad credit habits to require counseling.
OK, enough random rambling... Been out of the biz for a while now but will gladly answer Q's via PM if you have any. Happy house hunting/debt creation! Remember that we are now a debt based economy... be sure to do your part!
Now back to your regularly scheduled rambling
