Articles Tagged With: FHA Loan Application

December 22, 2011

FHA Loans And Credit: What Is The Lender Looking For?

When first-time FHA borrowers submit their loan applications to the lender, it’s natural they might feel nervous about the outcome of the lender’s review of the application data. Will the borrower’s occasional credit missteps or isolated credit problems negatively affect the ability to get FHA loan approval? FHA rules for lenders include a long list of requirements for the credit check, which includes the following: “Past credit performance is the most useful guide to

December 6, 2011

FHA Loan Debt To Income Ratio Rules

By Joe Wallace

In recent blog posts we’ve been examining the FHA loan debt-to-income ratio rules. The FHA requires borrowers to have a combined monthly debt load and projected FHA home loan obligation that does not exceed 41% of the borrower’s income. As stated in previous blog posts, FHA guidelines require the lender to examine the borrower’s monthly debts and compare to his or her monthly income. The total amount of debt including credit card payments, auto loan payments, student loans, and other payments, is added together, then combined with the total amount due each month for the FHA home loan. That figure does not just include the mortgage payment itself–it also includes any home owner association dues, amounts which must be deposited in escrow for property taxes and insurance, etc. When the | more...

December 6, 2011

FHA Loans and the Debt To Income Ratio: Projected Debt

By Joe Wallace

In a previous blog post, we mentioned the importance of the debt to income ratio as part of the FHA loan application process. Calculating the debt to income ratio for the purpose of underwriting an FHA mortgage loan includes adding up the entire monthly mortgage obligation (principal and interest, escrow for taxes, hazard insurance, mortgage insurance premium, and any homeowners’ association dues) and reviewing all revolving and installment debt due per month. These can include personal and automobile loans, student loans, credit card debt and more. These amounts are combined and divided by the borrower’s verified gross monthly income. FHA rules say the maximum ratio to qualify is 41%. But when calculating that debt to income percentage, the FHA requires lenders to examine not only current financial obligations but also | more...

October 20, 2011

Can I Add A Borrower To My FHA Home Loan?

By Joe Wallace

One common question about FHA home loans involves adding borrowers to the loan. Some house hunters begin their search for a home by themselves, but along the way decide they wish to co-borrow with someone else. The reasons vary–some borrowers get engaged to be married, others decide they’d rather share the expense of buying and owning a home with someone else, others want to purchase property with a family member. Whatever the reasons, adding someone to an FHA loan depends greatly on where a borrower is in the application process. FHA loan rules state that all borrowers must submit loan application data. No one can be added to an FHA loan without submitting their credit and employment details and other required information the same as the primary borrower. Lenders must | more...

September 2, 2011

FHA Loans And Minimum Employment History

By Joe Wallace

After getting a reader question about minimum employment history for FHA home loans, it seemed like a good idea to revisit the topic. FHA requirements require the loan applicant to provide least a two-year work history for the lender to review. But that two-year requirement is not used to set a minimum standard for the length of employment. The FHA official site says,

August 25, 2011

FHA Loans: What Does It Mean To Be Listed in CAIVRS?

By Joe Wallace

Any type of home loan includes a credit check, including FHA insured mortgages. But FHA loans include an extra requirement when it comes to credit–the borrower is not eligible for an FHA mortgage if he or she is delinquent on any type of federal debt. An FHA approved lender is required to check to insure the borrower is not delinquent on any debt owed to the government; that check is done using a system called CAIVRS, which stands for Credit Alert Interactive Voice Response System. This system provides a list of all people currently in default on an FHA insured mortgage, those who have had a government-backed home loan foreclosed on in the last 36 months, and those who are delinquent on a debt owed to the government. According to | more...

July 15, 2011

Verifiable Income Rules For FHA Borrowers Between Jobs

By Joe Wallace

FHA loan applications require the borrower to submit information on past and current employment including gross income, how long the job has lasted, and other details. This data is not accepted at face value by the lender; the FHA requires the loan officer to verify sources of income to make sure they are legitimate and acceptable.

June 20, 2011

Can I Use Rental Income on My FHA Loan Application?

By Joe Wallace

An FHA loan applicant who owns a property he or she is currently renting would naturally want to include that income on the loan application. As with all other sources of income, the borrower must not only list the amount of that income, but also be able to show to the lender that the money is stable. Since an FHA lender is charged with verifying all sources of income, the borrower must provide proof that rent money coming in is likely to continue. What does the FHA require as proof of dependable income when it comes to rent payments? According to the FHA official site, “Examples of stability may include a current lease, an agreement to lease, or a rental history over the previous 24 months that is free of | more...