November 14, 2022
The FHA and HUD made changes to home loan approval procedures aimed at helping first-time home buyers. These changes allow participating FHA lenders to use qualifying “positive rental payment history” in their loan approval process, but only for applicants meeting the FHA description of first-time home buyers.
Borrowers who worry about their ability to be approved for a home loan may have an additional advantage using an FHA mortgage because of this.
According to the HUD official site, rental data is not included in “most Tri-Merged Credit
Reports or Residential Mortgage Credit Reports” which are used for FHA-insured loans. When the information IS available, it may be as separate documentation.
The FHA has now updated loan approval processes and software so lenders may add positive rental information as a factor for FHA loan approval. Part of the reason for these changes is to make the approval process for buying a home more accurate.
But it also changes the game for new house hunters.
Any borrower meeting the FHA’s first-time home buyer requirements and who has a positive rental history may have an advantage in terms of getting a mortgage loan approved that they did not have before–but there’s an advantage when shopping around for a loan, too.
Comparing loan options among competing lenders gets more interesting when you can ask those lenders which of their loan options allows you to use your rental history to qualify for the loan.
Ask the lender which option you have a more realistic chance of being approved for based on your credit, including rental history, and see which of the loans makes the most sense.
Every home loan program has advantages and disadvantages. Much will depend on your personal financial needs and goals, but it’s never a bad idea to compare loan options side by side. The pros and cons of each may become easier to spot when you look at them together.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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