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FHA Loan Requirements and Underwriting Guidelines 2014

by Scott Skyles on April 30, 2013

in FHA Mortgage

There are several reasons why a borrower would want to consider applying for an FHA loan. You may want to buy a home, but you don’t have a down payment that a conventional mortgage would require. You would like to refinance your property, but you don’t have the required amount of equity in your home, or you might have had some credit issues in the past that has given you an unhealthy credit score.

What is the Federal Housing Administration?

The Federal Housing Administration, commonly known as “FHA,” is part of the U.S. Department of Housing and Urban Development (HUD.) The program was created for low income individuals, or families that might need a little help in the home ownership process. FHA does not fund loans; they insure residential mortgages for FHA approved lenders in case a borrower defaults. This allows borrowers to qualify with lower interest rates and be subject to less strict underwriting guidelines.

FHA Mortgage Requirements for Purchases and Refinances

  • FHA provides insured mortgages for single family homes, multiunit homes, as well as condominiums
  • FHA loan maximum can vary per county; however, $521,250 is the average for most counties. You can check what your county’s maximum loan amount is here
  • As of late 2009, the minimum down payment has risen from 3% to 3.5%
  • You must have two years of steady income and your DTI (debt to income ratio) cannot exceed 29%. Meaning, if you have a monthly income of $3,000, your mortgage payment cannot exceed $870, which is 29% of your monthly income
  • The borrower cannot have a credit score under 580, or 620 depending on the lenders’ guidelines
  • The first mortgage to be refinanced must already be FHA insured and current
  • The new FHA refinance must reduce the borrower’s monthly principal and interest rates with a cash-out no greater than 85% loan to the value of the home
  • A bankruptcy must have been discharged for a minimum of 2 years and has not had a foreclosure for at least 3 with unblemished credit since
  • Minor collection accounts do not need to be paid in full in order to qualify for the loan. Judgments, on the other hand, must be paid in full.

These are the latest FHA mortgage requirements from HUD as of  the changes that were made in late 2009. If anything should change in the mean time, please let me know and I will update the requirements immediately.

{ 89 comments… read them below or add one }

Ronnie

I have a mid credit score of 735 and have a decent salary. I have student loans which are currently deferred for about 1-2 years. Do the student loans still get factored into my DTI even though they are deferred?

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Scott Skyles

Hi Ronnie,

Yes they do.

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Danielle

Is it still possible to obtain an FHA mortgage after one year of filing a Chapter 13 Bankruptcy?? If all payments have been made on time?

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Scott Skyles

Hi Danielle,

You have to be at least two years out of bankruptcy.

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Veronica

I have been approved, or so I was told I was approved for about $130k with mortgage ins. and tax included. However, home value is $125,680. My middle credit score was 607 +7 with rapid resource. I had 5 accounts that i was told needed to be brought down to 30% (which i did) and a vehicle loan that had a balance of about $9k. I was told that my vehicle needed to be paid off in order to have good DTI rations. Of course I was a little skeptical, bc if not approved, I would have a good down payment. So there I went and paid it of since the lender said that was needed. About 1 week prior to closing, I was told I needed to show proof of my student loans being on defferment. My closing date was supposed to be 4/1/12 and my loan defferment ends 7/14/12. I was told now that my loan would have to be added as part as a montly expense since it is not reflecting a year’s deferrment from the date of closing. I contacted the loan company and they were able to reduce it from $156 to $68. I provided my lender with the documentation, and then I was now told I needed to pay off all my other accounts in order to “qualify” which totaled to an additional $387 on top of the $9k I paid from my vehicle!!!!!..so again, I provided all receipts of the pay off and they said they were going to send my employment verification and after that, they would submit to underwritting. They sent in my verification 2 days prior to closing (I thought that was done in the beginning) and according to my verification, my montly income was not adding up to what they were calculating. Of course I have taxed income from my job for over 3.5yrs and non-taxed income that I have been receiving for 2yrs that they are saying cannot be used. Therefore, I am not qualified bc my ratios are too high. They are calclating my ratios to be 48.71%/52%. These numbers are extremely high but because my non-taxed income is not being taken into consideration…Instead, I was told that I should open a child support case to have additional income showing…when clearly I do have extra income, but are refusing to accept..is there anything that could be done?? Ive put so much money into this and I’m now starting to think it was for nothing. I could have used all that money ( $9,384) as a down payment…

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Meghan

My husband and I are looking to purchase our fist home. I currently do not have any credit, but my husband is 600. Our price range we are looking at is 100,000 and we can put 3.5% down! The only problem is we cant prove any renting within the last 12 months and have one collection against us in August of 2010 for 1,600. Is a FHA loan possible for us, and if not would a USDA loan be another way to go?

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Scott Skyles

Hi Meghan,

Even though a lender is able to have the loan they provide you insured by FHA, they’re still going to have their own terms and conditions for approving the loan. Some are more lenient than others, so you’re going to want to seek out an FHA approved lender within your area. Whether you go FHA or USDA, I have a good feeling that the lender is more than likely going to want to see the $1,600 that is in collections paid off.

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Chanel

My fiance and I built a home through a builder who was willing to work with on my credit score so that I could qualify for the loan while the house was being built. My fiance has a score of 700+ average and mine is 550 average. We need both of us to be on the mortgage to qualify for the income purpose. Is there any loan that we can obtain in the process of my raising my credit score. The home is due to be finished in 2 months.

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Scott Skyles

Hi Chanel,

Is there credit card balances, or collections that could be paid off to get you over the 580 mark?

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claudia

Can u verify if the following is correct. My sp and i were approved for $201k fha loan w/scores around 645 and 3.7% interest supposedly. Only thing is we didnt want to close until after april. We were advised after april 1st fha will require all collections on ur credit to be paid in order to close.its a new “requirement for any fha loans” can u confirm that?

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Scott Skyles

Hi Claudia,

The new guidelines that are set to be in effect on and after April first will require that if you owe more than 1k in collections, you have to get the outstanding accounts resolved. Meaning setting up payments arrangements with three on time payments or paying off the accounts in their entirety.

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Kimberly

Hi, I have a lender who is telling me that I can’t qualify for an FHA loan becuase I don’t have enough time with a good payment history. My scores are right at 620 (low) 660 (high). I have the 3/5% down, no debt and 2 years of good rental history. However, this guy is telling me he can’t get me approved because I only have 8 months of ontime payment history with my credit cards (both of which are at 20% utilization). Do I need to find a different lender or will I have to have a year of on time payment history before an underwriter will even look at me?

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Scott Skyles

Hi Kimberly,

Unfortunately, your credit history does have to be free from any late payments for at least 12 months.

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Terri

Scott,
My husband and I are trying to buy a house. He has a credit score of 660, self employed which makes income not steady. I have a credit score of 530 with 8yrs on the job, making over 30,000 a yr. (credit score dropped when I had a heart attack in 2010 and got behind on medical bills and credit cards) Everyone we talk to will only count his income on a home mortgage loan and not mine due to my credit score being so low. Do we have any other options? We are approve for 80,000 but if they would include mine it would be alot more. The house we want is 140,000. Is there some kind of loan that will count my income with a 3.5% down payment?

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Kathryn

My husband and I are in the process of trying to buy a home. I finished graduate school last May and have been gainfully employed and on salary since June 1st, 2011 making $53,000/year. I have a credit score of 730 and have never been delinquent. My husband works offshore and takes in over $120,000/year, however, has a credit score of 634 due to late payments about 4 years ago on store credit cards in college (Gap, etc) where he eventually paid off in lump sum, closed his account and has not had revolving credit since then to improve his credit. We are having to go through some extra steps to showcase why we would be good candidates despite his credit score for a 271,000 loan. What are our realistic chances of getting this loan? Our lender says he is “hopeful” but never gives a clear statistic.

Thanks

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Scott Skyles

Hi Terri,

If your credit score falls below the required score acceptable for approval, you cannot be on the application or use your income. I would work on repairing your credit to get your mid score to at least a 580. I hope this helps.

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Erik

My wife and I are trying to buy our second house. Our combined income is over $93K. We also have residual income from oil well investments coming in monthly. My high credit score is 723 and low is 680. My wife’s is around the same. We are trying to get about $200K loan and have 20% to put down. We have zero consumer debt and 20K in school loans, no late payments in over 12 months. Should I build our credit more, or would a loan be easy to acquire now?

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Scott Skyles

Hi Erik,
Your scenario sounds great! I would go ahead and apply for your FHA home loan.

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Mariah

Me and my husband are currently in the FHA loan process right now. I currently have a temp job, but im going to be perm beginning of next month. My LO said they’re going to try and close our home by the end of the month. Do you think when our loan goes to the underwriters, the underwriters can decline our loan because im a temp as of now? I haven’t even told my LO that im temp to hire. my manager already said if they call her she’ll say im full time. should i create a letter?

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Scott Skyles

Hi Mariah,

I would have your manager type a letter stating that you are going to be making a transition into full-time within the near future.

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Noy

I’m in the process of purchasing my first home. My lender was recently approved to do FHA lending so my loan is their first test case. It’s gone through the bank’s internal underwriting and now has been submitted to HUD for review. What are the chances that HUD comes back with additional conditions? What are the common conditions?

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Scott Skyles

Hi Noy,

It’s very seldom that a loan file ever comes back with 0 conditions. However, usually there are small tweaks that a well trained loan officer can fix pretty quickly.

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Ryan

I have a current credit score of 630. Three credit cards. One with a limit of $400(Orchard Bank) one with a limit of $200(Capital One) and one with a limit of $100. There all paid off. I have a car loan which I owe about $8500. I’ve been current on my payments the last two years maybe 1 or two late payments . I make about 70K a year. Debt free. I run a business w my family so that would increase my income amount. I’m looking to Purchase a townhome around $225k. I have 6 hard inquiries on my credit report. Do you think I will have any issues with a FHA loan?

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Scott Skyles

The late payment within two years might give you some trouble.

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misty

Hi I have a credit score of 635 and i’m trying to get a home equity loan, with a cosigner, we were denied by my bank and the value of my home was assesed at $200,000 I own it outright..any idea why I would be denied?

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Scott Skyles

Do you have any late payments on your credit report?

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Kevin Mills

Hi. There was a period of time when the mortgage company told me that I needed to not pay my mortgage for 4 months straight if I wanted them to do a loan modification. Over 1 1/2 years ago I did that and I have been current on my payments since. Now that I am trying to refinance the loan officer asks why I was late multiple times 1 1/2 years ago. He does not seem to accept this as a good reason to have been late.

What is considered an acceptable and forgiveable reason to a loan officer to have made late mortgage payments?

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Scott Skyles

Although I don’t recommend lying to a loan officer, I personally have pushed a loan through when my borrower had been hospitalized causing him to have a late mortgage payment.

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Kellene

Hello Scott:

I am thinking about applying for an FHA loan for a single family house value $75000, I have been discharge from my chapter 7 two years now and i have $67000 in student loan, monthly income is $31,000(gross), 4 credit card less than 30 % in balance, credit score 649, 671, 677 and $400 in bills. Is it pissible to get a loan for 72,000 based on my history ?
I have the 3.5% downpayment.

Thanks Scott

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Scott Skyles

Your situation sounds perfectly okay with me. Since lenders go off your mid score and yours is a 671, you fall within the FHA guidelines.

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Tiffany Jones

Hi Scott,

I have a question. I just recently completed the loan application and had my credit pulled. It showed that I had a 90 day late payment with one of my student loan providers (I currently have two, Nelnet and AES). I contacted them (Nelnet) because I did not remember being late and they wrote back that this late payment occurred in 2007. Also, my payments with both are currently in deferrment, when it came time to reapply for deferrment, I had moved, changed cells number and etc so once I reapplied, the loans were showing 60 days late however the deferrment/forebearance period that I was approved for did cover this tiime period. I contacted Nelnet and asked that they remove the 60 day late payment mark being that it was covered under my deferrment/forebearance and they did remove this mark from my credit however AES has still yet to remove theirs. Other than that, my credit profile looks good. I have (2) unpaid medical collections that are both over $1000. One is $1100 and the other is $1200 and they are from giving birth and then a subsequent surgery that I had after giving birth. My loan specialist has indicated not to be concerned about them. Do you think I am going to run into any issues with the student loan mark being 60 days late if AES is still unwilling to remove theirs from my credit profile? Also, I was told that the $1000 collection account rule with FHA has yet to go into effect so will I still be okay in that regard as well?

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Scott Skyles

Hi Tiffany, you very well could run into some problems with the late payment. I would try your best to get that removed from your credit report. You’re okay with the collections at this time.

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jclark

Hello Scott,

I have been shopping for a FHA mortgage for quite some time now. I have paid all chargeoffs, have no bankruptcies or public records. I have positive revolving and installment credit accounts. My median score is 626. I have read all requirements for approval for a FHA loan however, two different lenders have denied me due to my credit score. Are there any lenders out there approving scores less than 640. Please advise. I am really frustrated and confused.

Thanks
JClark

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Scott Skyles

Hi jclark,

Lenders still have their own guidlines, I would fill-out your loan scenario with lendingtree.com and I’m sure there will be a lender out their that is able to help. If this was a year ago before I retired, I could of surly gotten you approved for an fha mortgage.

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Shana

My husband and I are trying to purchase our first home. Experian shows my husband has score of 661. Experian on Freencreditscore.com shows me I am a 634. I have been at my job since 2008 with a steady income. I currently make $49,700 a year before taxes and he makes $28,800 a year before taxes (this I just totaled from his recent pay increase) He has not quite been at his for a year (it will be I believe April of 2013) however he still is doing the same job as his previous one(s).

We have a joint sign. loan for $2,500 payment is $90 a month. He has another sign. loan in his name only for balance less than $4,000 payment is $123 a month. I have two credit cards (limit is $2,500 with balance of $2,000-trying to get lower.) (Another card has limit of $4,500 with a balance of $2,500.) I have a auto payment in my name only that we purchased at the end of March of this year 2012 and they payment is $683 a month with balance of around $39k right now. I also have a small Paypal credit that I can pay off or get balance under way under $100, as There is only less than $200 on it.

I have one hospital bill in collections I believe is over 2 years or is almost to 2year mark of $670.

My husband has three things in collections, that if I recall correctly are 2year or more, they were medical related. They are small a balances. Two at $50 and one at $75. Tried getting the collection agency to remove from credit report if paid in full. They say no. Afraid if we pay them I heard it could affect score for worse and not better ?? I also heard FHA does not look at medical. But I don’t know 100% for sure.

Also thought of refinaning the auto loan to possible lower the payment by $100 or more a month, however running my credit could lower my score too much more. However I’m also afraid that it could hurt the debt to income ratio or it could hurt that I recently purchased the property not even a year ago yet.

We also have rental history where we have lived in the home for about 6 years with good rental history. We pay &1,100 a month.

All bills are paid on time, from the credit cards, auto loan and the two signature loans, oh and the paypal credit line. Even though the auto loan and credit cards are in my name or one sign. loan in his name only we have a joint bank account and we share all the bills.

We are waiting for our income tax return for make sure we have all of they 3.5% down. We are purchasing a new mobile home and land together and they said the closing costs can be put into the loan. However looking at a good faith estimate example online of $100k loan (which is what we are looking at getting or less) say there is other costs besides closing fees like Prepaid items, escrow items and Settlement costs. These seem to be more $$ (in worst case senorio) than what I can come up with. Are these fees also added into the loan?

Sorry for being so long and the different questions. I’m am just worried that it will not work out and I am trying to purchase the land my grandmother lived on to keep it in the family.

If you could be reply at your earliest convience I would greatly apperciate it. thank you so much in advance.

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Scott Skyles

Hi Shana,

You’re scenario seems okay to me. As far as the collections are concerned, paying those off can only help.

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Kim

Hello I’m interested in purchasing a HUD home using an FHA loan. I do have some road blocks. I went to nursing school for a couple of years and unfortunately in that time my credit became an absolute disaster. Charge offs, collections, late payments, even law suits for dental bills and a major credit card. None the less, After graduating I finally had a real income, became financially focused and managed to pay off the majority of my outstanding debt. The only things that are left are 3 medical bills in collections totaling $1100.00, which are currently being paid on. None the less, I’ve been able to rebuild my credit. All student loans are current and in good standing, I now have a credit card, which remains current (although it doesn’t have a high credit limit). My credit score has gone from 525 to 633, my debt to income ratio is about 21% and I have about $5,000 to put down on a house that is currently being sold for $100,ooo. Do you think that I’ll have any problems with a loan approval?

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Scott Skyles

Your scenario sounds fine to to me.

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sharon kelly

I got pre approved for a fha loan of $200.000 the bank changed their score of 620 to 640 do i still have the fha loan of $200.000? I am with another lender who have to look at my income it is the same in come that I had when I was at the bank.

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Scott Skyles

Hi Sharron,

What is your current credit score? According to the fha mortgage requirements, you should be ok, however, individual lenders do also have their own guidlines.

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Caroll

My spouse and I are looking to purchase a home with her VA benefits. Our situation is that she has had several checks come through her account, which we covered by her overdraft protection, which techinically means they were not returned. Will underwriting deny our loan because of this? Should we close that account and re-establish another before the loan package is submitted? We have worked hard to get our scores up, and currently they are at 670/650.

I am curious to know what everyone thinks regarding the banking issue. I am not sure if underwriting will even contact the bank once the accounts are closed, but I figured it was worth asking.

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Scott Skyles

Hi Caroll,

This shouldn’t be an issue.

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Chris

Hi Scott,

I was wondering if I could purchase an owner occupied home through FHA? I also wonder if I can do an FHA refinance of my existing home that I bought April 2012 thanks to my credit union giving me a loan.

My credit score is 681.

Here’s the catch..
My Ch. 7 was discharged including my mortgage debt in Nov. 2010 (from my old home I bought in 2005). However, the lender did not take the deed of the property until July 2012 (almost 2 years after my Ch. 7 discharge).

I’m wondering if I’d even be eligible for any federal govt home loan now, and if I’m not, how long will I have to wait?

Thanks for your help.

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Scott Skyles

No problem, you’re fine as long as it has been 2 years since discharge.

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John

I was looking on getting a FHA loan and I have student loans deferred until graduation March 2014. I read in a couple places if my loan is deferred for at least 12 plus months, that they don’t have to be counted in DTI. Every mortgage company (chase bank and capital one) say they have to estimated 2% even though they are deferred. I even considered starting a payment of 100$ a month towards interest on student loans. So that the lender won’t have to guess how much payment would be. My credit is fine I have a total of 75,432$ with of bills. $22k car loan (capital one) $51k student loan and 2k in doctor bills. Truck note 530$ credit card paid of ever month 3 total. Never carry over balance but total minimum payment is 40$ so without student loan dti is $570 with income of 3400$ if I start paying intrest in student loan $670 dti. If they add 2% of student loan $1570 DTI. Please advise. I am really lost, and would not even mind if you called. 512-299-1855. Looking for any advise.

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John

I am getting married in June and this is the only present I want is to please my fiancé with a new home of our own to move into.

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Wendy

I had a short sale in June of 2011. My credit previous to that had been well above 800. Never late on anything ever. Bought and sold homes, cars, rv’s…you name it. Never a blemish until the short sale. My credit report does not show any delinquent amount due to lender, but does show that loan was not paid in full. My score now is 760 and I am trying to get FHA financing….is this possible? Will anyone lend me money???

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Mike and Grace

We have been approved for a FHA loan of 130,000 but we are looking for a home for 115,000 tops we only have four thousand in the bank is there any way for us to get into a home with these funds.We cannot or have no way to barrow either thank you for any help to make our apartment living nightmare end so we can start living our dream.

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Scott Skyles

Hi Mike and Grace,

Since you were approved for $130,000, you won’t have any problem with purchasing a home for less.

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Toney

I would like to apply for an FHA mortgage but I have a few questions, credit scores are experian 702, equifax 680, trans 667, I have some negitive items on my report that are taking forever to be removed so I would like to go ahead and apply for their t loan, one in which has 3,700 balance it’s five years old this one was removed from one agency but not the others, two under 200 they are medical bills, one 570 balance . I also, have a 30 day late from 5/2011, which was my fault but it’s there, I have been trying to have it removed but nothing yet. Should I apply for the loan now of continue to wait?

Also, is there a bank that will count rental property as income once I have purchased the new home? I am having a issue with qualifying for the loan amount that I want. My income is about 40,000 and I have a car loan with payment of 390 per month, I can pay this loan off if need be, and a mortgage of 237 plus 200 maintence fees per month, how much home can I afford based on FHA guidelines?

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Scott Skyles

Hi Tony, your credit and income are good.. however, I am unable to determine if you would qualify without calculating your DTI.

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Georgia

Hi Scott! My husband and I were forced to relocate from VA to TX this past year due to my husband’s job being transferred. As such, we had to do a short sale on our home in VA, which had been more than 150,000 underwater. We got through without any delinquencies and full forgiveness from both the first and second mortgage companies. Both of our mid scores are down around 675-680 now. We have significant assets to cover a down payment and a combined income of $200,000. Do you think we’re ok to try for an FHA mortgage?

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Scott Skyles

You’re going to have to wait for a least 3 years from the date of short sale.

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Amanda

My husband bought a home before we were married and we have owned that home for 7 years. I just received a promotion and must relocate over an hour away. We have went and applied for a 2nd FHA loan and got the green screen that stated our Debt to income was what it is supposed to be, but since it was a 2nd FHA loan it must go to the underwriters for their approval and we just got a call yesterday that said they denied it only b/c they are scared we will dump our first mortgage. We have never dumped any payment in our lives and I felt very offended they would assume that. Our current house we haven’t had appraised, so the loan officer only considered what zillow’s website said our home was worth. What should we do at this point?? I have to re – locate and we don’t want to rent and throw money down the drain. Any advice to what we can do??

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Scott Skyles

Hi Amanda, have you tried different lender? Although the mortgage is FHA, lenders still do have their own guidelines.

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Pamela

Scott,

We are triying to buy a second home, we already had a condo, we are in HAMP program, my husband got a charge off for the second mortgage of this condo, 35,000, from 2008, his credit score is 716, mine 780, he is selfemployed 2 years ago, the company that we have is in my name also, I have a steady job, make around 23000 per year, I know its not much but I would like to apply myself for a loan of 120,000 -150,000, it will be possible to have this loan?

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Scott Skyles

Hi Pamela, your credit scores are up to snuff, but I really can’t determine without know what your debt to income ratio is.

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Kristin

Hi Scott,

My husband and I have purchased a home for $132,500 FHA loan and everything has been approved and inspection/appraisal done, it is just in the underwriting stage apparantly and has been about 2 weeks. Our closing date was supposed to be 2/15/13 but we just received a phone call from the bank stating that one of the underwriters or whoever just found my husbands federal student loan which he has a balance of $6000 on. They garnished his wages 8 years ago and he has been having them take the full 16% out of his paycheck for 8 years. That is the only thing they have found. Nothing else on his credit and his middle score is 700. Our bank consultant that we have been going through doesn’t seem to have a straight answer for us but says that she is hopeful if we can get everything in writing stating that he has been paying on this. We sent copies of all of his paystubs where it shows being deducted and he had the original contract from 2005 stating that he would have payments taken out. We are very worried that we are going to lose the house now. What would your opinion be on this matter it would be very helpful to us at this point.

Thank you very much.

Reply

Scott Skyles

Hi Kristin,

I’m a little unfamiliar with federal student loans.. Did they have to obtain a judgment in order to garnish his wages?

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Pamela

Scott, I check my credit report and I only have 15% of debs and I know they recommneds 25% as minimun, so i thing this is good, the only thing I would like to ask you is that I worked for this company since 2006, but last year I worked for the new brand Co they opened in 2010, same owners, buy they closed down the co. and I comeback to the co that I worked for years and they started pay me with checks , means that they want to give me a 1099 at the end, and of course i dont want that, i need to be in payroll in order to qualified right?

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Scott Skyles

No, just as long as you’re still employed.

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Vicki

Hi. We are low-income but have excellent credit and enough money for a down payment on a lower-priced condo in our area. The problem is, I work part time, and it’s been less than two years. My husband works full-time. We want to buy now and not wait until I’ve worked two years at my job. Home prices are going up as I speak, and so many of the lower end places have been gobbled up by investors (since I now know about this, I 100% believe this should be illegal). Anyway, I assume that FHA won’t accept my income either, but, I thought I’d ask. Do you know? Could we get an FHA loan somewhere where they will include my income in consideration of the loan amount? Thanks!

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Scott Skyles

Hi Vicki,

Unfortunately, you have to be employed, or have been in the same field for the past two years.

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Tony

Hi Scott,

My current Fico score is 645. No late payments within last two years. My salary is 55k per year with 15k potential bonuses. My current debts total 517 per month. I have two charge off credit cards from 2009. Is there a chance I could qualify for an FHA loan?

Reply

Scott Skyles

Hi Tony,

With the information that you gave have given me, your scenario sounds like you would be an excellent candidate for an FHA mortgage.

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Katherine

My husband I were prequalified (after a credit pull) for a home loan. I know this isnt the same as a “preapproval” we were planning on trying to get something later 2013 or early 2014, but prices in our area have pretty much gone up by 20000 in a month. We are applying for an FHA loan, and between the home builder (12500 in incentives) and a local program we are looking to use (10000 for down payment etc) and our earnest deposit the down payment and closing costs should be more than covered. We had a chapter 7 in 06 and late pays on credit cards in late 08-09 (3 months out of work on short term disability, returned to same employer after wards and still employed by that same job), and a few accounts from that timeframe that were put in collections (all paid in full) I also wrote a LOE for all of those. My concern is that since we are going through the process earlier than expected our checking and saving accounts dont look fantastic. Our beginning balance on the first statement submitted was overdrawn by about $150 – deposits on the first daty of new cycle took care of that (misjusdged the amount of time checks would be in the mail). during the second cycle account became overdrawn again (by about $90) a day before deposits because my husband didnt consult me before making a purchase. There were no nsf fees charged on either statement. but will this cause the underwriter to turn us down? thanks for the advice!

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Scott Skyles

Hi Katherine,

You shouldn’t worry. Worse case scenario, you would just have to write a letter explaining what happened.

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roxanne

Curious to know how long I will get financed for the 2nd time around? My credit score was 620 when I applied for a loan. Paid off all my collections and got a couple small credit cards and used accordingly to improve my credit rating. Not that I have come to the understanding how important one’s crdit score is, I pay early and extra on everything. The seller wanted 50k, I offered 50k. I paid 10% down and borrowed 40k from the bank. The property appraised for 60k. For the last year I have remodeled and increased the equity in my home. My 1 year anniversary is right around the corner and am curious to know how long I may or may not be financed for. And, if it’s short term again, should I seek another lender? Thank you. =)

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Scott Skyles

Hi Roxanne,

I am a little confused.. What is making you finance your home again?

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corina alanis

I have a repo which shows as a collection of $17,000 in my name since 2008, Ive had 3 credit cards that Ive never been late on since then. my credit score is 628. so you think I would qualify for a loan with FHA? or does that collection have to be paid off?

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Scott Skyles

You have to payoff any collections over $1,000.

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Pat

Hello,

My credit score is 651, 658, 651. I had to file for bankruptcy in 2009 because of some rental properties I had. I now have 2 credit cards for $1,250 and $2,500 which I pay on time. I currently live with my son who I pay rent to every month. I would like to purchase a home under the Myhome program in MD. My situation that caused me to have to file for bankruptcy really stressed me out because i was always able to hold my own before then and dont want any credit cards i dont need. What is the likelihood of getting a mortgage with only 2 credit lines.

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Scott Skyles

Hi Pat,

Lenders go off of your income and credit score. The number of credit lines doesn’t matter at all. With the information that you have provided, I don’t see any reason why you shouldn’t be approved.

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Camille Jones

I am currently trying to get approved for an FHA loan. I recently paid off a charge off that was on my credit. I have one credit card that is in good standing for a year now and also student loans in good standing for 2 years. My credit score was 620 last time I checked which was a month prior to me disputing a lot of things and paying off my charge off. I only have 2 medical bills on my credit. One for $152 that is 2 years old and another for $254 which is dated back to 2007. Will I have a problem getting approved or should I pay off the medical bills? I thought I read somewhere on this site that anything over 2 years old is not looked at or counted especially if it is medical related. I make 48k a year and this would be my first home purchase. Also I am going through Chase which is my bank.

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Scott Skyles

Hi Camille,

As long as you keep your score above 620, I don’t see any problems with you being approved. Although FHA allows credit scores as low as 580, there are not many lenders that do.

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stacy

My husband and I are seeking to buy our first home.
In the past I cosigned for my parents home so they would get approved for a $60, 000 home equity line of credit, which was approved. However I’m not making any payments for the home, my parents are. The Bank has said they would write the lender a letter that I’m not making any payments towards there home which should hopefully help me qualify for a homeloan. Between my husband and I we make almost $100, 000 a year and never have been late on out rent payments since 2008. What do I need to do to also help me qualify for a home?

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Scott Skyles

Hi Stacy,

If the bank is willing to accept the letter, I don’t see why you shouldn’t be approved. Do you know your credit scores?

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stacy

Hi Scott my score is a 620. My parents bank is willing to write a letter that I’m not making no payments towards there mortgage and home equity loan I was just the cosigner.
Its been 7 years since I’ve been on there loan amf credit report shows a grade B

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Luis

Hello,
We live in a home that is 80% paid for. We want to rent it out and buy another house. My credit score is 750. I have been self employed for a about 20 years and show a very low income. Can I qualify for another loan with a low income? My credit history is excellent.

Thank you.

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Scott Skyles

Hi Luis,

Some self employed borrowers do not pay themselves enough to qualify. Your approval will also depend on if you meet the debt to income requirements. I hope this helps.

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stacy

Whay does a grade B mean on a credit report under a homeloan?

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debbie

My husband and I both have credit score below 600. We have been renting a house and no problems with the payments. Now they want the house sold. We have 2 open credit cards with very low balances. Can we get a FHA loan?@

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Scott Skyles

Hi Debbie,

Try your local bank. Most national lenders except credit scores below 640.

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Joe

Hi Scott,
My mom and I are looking at buying a brand new manufactured home and placing it on land. We want to use Wells Fargo because they are one of the few that will lend on a manufactured home. My mom’s credit score is close to 800 and I ave a score 650-700. We make about 4100.00 a month, I have a lease that on a car that ends in a yer, a loan that will be paid off in two years. My back end dti is about 41%. Wells Faro says we are system approved, what are our chances of getting a approval fom the underwriter?

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Scott Skyles

100% You have absolutely nothing to worry about.

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Lisa

Hi Scott,
My fiancee is currently trying to purchase a Fannie Mae Foreclosure home for 98,500 @ 4%. He makes about $35000 a yr, his credit scores are 698, 701 and 709, he has been at his current job 6 months (with an apprentise sponsorship for 4 yr’s, so strong employment for the future) , after being laid off for 1 yr due to the terrible economy here in NJ. We have been in our rental home for 3 yr’s, rent NEVER late, paid in full, on time, very little on credit cards (just survey and appraisal for the home, about $600ish) no car payments or any other loans out there. He had a bankruptsy from 4 yr’s ago, due to his ex girlfriend running up credit cards he wasnt aware of (over $60,000, he couldnt prove it was her, so he did a ch. 7 that was discharged) Will we make it past underwriting, which is where our loan is at the current moment?

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Scott Skyles

Everything appears to be strong to me. I don’t believe you will have any problem. Enjoy your new home!

Reply

Ebonie

Hello,

I lost my job back in February 2011. Because of this lost, I wasn’t able to pay my credit card debt and my credit score went way down. Since then, I was able to pay off all of my debt and collections. I’ve been working with a mortgage lender to do a rescore to get my credit up. My score went from a 534 to a 621. The mortgage lender says he wants to see my score get to a 640 in order to get me a FHA mortgage. I have one account that had a late payment as of August of last year, and it has been paid off. All of the other late payments on my report were from 2011 and, again, those have all been paid off. I currently have a good job, I make $43,000 a year, but I’ve only had it for a year. Prior to this, I had other jobs with income that I can prove, but they weren’t necessarily steady. All of my student loans are deferred for at least 1.5 years, and I have a car payment, $450 a month, and one credit card with a $300 limit and a $0 balance currently. I am worried that, even with a 640 score, that I won’t qualify for the FHA mortgage with the late payment from last August and the steady income history for only a year. Please let me know what I can do. Thanks!

Reply

Scott Skyles

Hi Ebonie,

Most national lenders now do not lend under 640 credit scores, however, smaller banks do. I would try going to your local bank. Preferably, the bank in which you hold a checking account with.

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