My Community Mortgage (MCM) and Flex 97/Flex 100

My Community Mortgage and Flex 97/100 are conventional loan alternatives (offered via Fannie Mae and Freddie Mac) to government loan programs such as VA, USDA and FHA.

Generally speaking, KMG Mortgage Group prefers to put borrowers into the corresponding government loan program, if the borrower and property qualify for them.

Why?  There are several reasons, but here are just a few:

1) Underwriting guidelines:

Government loan programs are more flexible in terms of underwriting guidelines than conventional loans.  While conventional loans rely almost exclusively on historical statistics to project whether or not a borrower is a high risk, government loans recognize that each borrower is an individual with unique situations and circumstances.  In the industry it is often referred to as "common sense" underwriting.

2) Private Mortgage Insurance:

Government loans do not require Private Mortgage Insurance (PMI).  While VA and USDA loans do require a "Funding Fee" and FHA requires "Up Front Mortgage Insurance", these are typically VASTLY more affordable than Private Mortgage Insurance (PMI) -- which is offered by insurance companies looking to turn a profit and are accountable to their shareholders.

3) Interest Rates:

Interest rates on government loans are often more competitive than those of conventional loans.  Conventional loans tier interest rates and swing widely on a number of factors such as loan-to-value and credit score.

Loan to Value	Conventional Loan Program	Government Loan Alternative	Why one versus the other?
100%	My Community Mortgage 100 Flex 100	VA or USDA	If borrower is neither a Veteran (VA) nor live in a rural qualifying area (USDA) and requires 100% financing, MCM and Flex 100 is an option. However, please read note about FHA below...
97%	My Community Mortgage 97 Flex 97	FHA	Generally, FHA loans require 3% contribution of the borrower's own funds.  HOWEVER!  Per FHA guidelines, the 3% can be gifted and the seller can contribute up to 6% of the sales price toward closing costs. In other words, it is possible to get into a house using FHA financing with $0 out of pocket. And, unlike USDA loans (which are limited in their geographic scope) and VA loans (which are limited to current or past military personnel), FHA loans are accepted everywhere!