AS SPRING APPROACHES, the traditionally hot home-buying season is set to begin. For many who presently own homes and are thinking about selling, this might be the time to finally make your move.

For many folks, the idea of moving up to their dream home has been a long-awaited — and frustrating — dream. The good news about rebounding home values means that for many folks who were strapped, with little or no equity, this turnaround means they can finally make their dream a reality.

Or can they?

As I talk to folks who are considering making a move, a predominant theme persists: Do we qualify?

This usually breaks down into one of two concerns: Do we have a sufficient down payment? Or, can we qualify under the strict underwriting standards prevalent today?

How much equity is enough? It really depends on the value of the property you are looking to buy. For most move-up sellers, ideal value ranges will typically take them into loan amounts that are considered “Jumbo,” or loan amounts greater than the Fannie Mae limits for their area. Jumbo loans are typically more restrictive and generally will only lend to 80 percent of the value of the property. Some Jumbo lenders will allow secondary financing for up to 10 percent. This secondary financing allows a buyer to get financed with just 10 percent down. As a bonus, there is no mortgage insurance or private mortgage insurance, or PMI.

If you are looking to purchase a home within the Fannie Mae limits, down payments could be as low as 5 percent or even 3.5 percent for FHA-backed loans.

So can you qualify?

Loan qualification is a lot like fingerprints: There are no two people in the exact same situation. Relying on what your neighbor, co-worker or family member may have experienced in qualifying for a home loan is not a good idea — for many reasons. Making assumptions about your ability to qualify based on someone else’s experience is a bit like assuming that you’ll make a killing on that hot stock because someone else did, long after the stock has peaked in value.

Long gone are the days of easy money — but the good news is that lenders are beginning to ease up a bit.

With the rebound in housing values, investors are beginning to show an increased interest in mortgage-backed investments. This renewed interest is reflected in some of the more innovative programs beginning to surface.

One program of particular interest to the self-employed borrower is the stated income loan. These loans, specifically designed for the borrower with difficult-to-document incomes, were quite popular in the early 2000s. Unfortunately some enterprising geniuses exploited the concept and as a result folks who had no business buying homes were buying homes that they simply could not afford.

The products coming to market today are much different than the fog-a-mirror loans of the early 2000s (“If they can fog a mirror, fund them,” was the famous Countrywide directive.) They require great credit and significant down payments and are not tied to risky loan features such as negative amortization. These new loans are specifically designed for borrowers who are well qualified in every sense, except they happen to have very creative accountants.

If you are wondering if this is the right time to make your move, do your homework. Get a qualified opinion of the value of your home from a local expert. Online valuations are interesting and perhaps even a bit helpful, but they are no substitute for the advice of a qualified Realtor.

Secondly, spend some time with a professional loan adviser. They will analyze your complete qualification picture and give you recommendations specific to your circumstances.

Now, as always happens, whenever I mention loan programs or terms in my column, my compliance folks begin to get nervous. So please know that this column is intended for informational purposes only. Any reference to loan terms or programs is for illustrative purposes only and is certainly not an offer to lend.

Guy Benjamin (CA BRE License #01014834) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or gbenjamin@rpm-mtg.com.

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