What Are FHA Investor Overlays?
What Are FHA Investor Overlays? FHA Investor Overlays are additional mortgage lending guidelines that are imposed and required by individual FHA approved mortgage lenders that surpass the minimum FHA mortgage lending guidelines set by the United States Department of Housing and Urban Development ( HUD ). Just because a FHA mortgage loan borrower meets the minimum FHA mortgage lending guidelines to qualify for a FHA insured mortgage loan does not mean a mortgage lender will qualify, approve, and fund the FHA Loan. FHA mortgage lenders can have their own set of requirements called FHA Investor Overlays. There are certain mortgage lenders such as myself where we specialize in originating and funding FHA Loans with no FHA Investor Overlays. There are many types of FHA Investor Overlays a FHA approved mortgage lender can require, however, we will cover the most common FHA Investor Overlays that affect most FHA mortgage loan borrowers.
FHA Investor Overlays: Credit Scores
FHA Loans have minimum credit score requirements. 2016 FHA Credit Score Requirements require a minimum 580 FICO credit scores for a 3.5% down payment FHA insured home loan. FHA allows for FHA mortgage loan borrowers with credit scores between 500 FICO and 579 FICO to qualify for a FHA insured mortgage loan, however, a 10% down payment is required. These are the minimum credit scores required by HUD to qualify for a FHA Loan and FHA approved mortgage lenders do not have to accept the minimum FHA Credit Score Requirements and can have FHA Investor Overlays, again, which are higher standards than those of FHA. Most mortgage lenders will have FHA Investor Overlays on credit scores where they will require a minimum credit score requirement of 640 FICO in order for them to take on the FHA mortgage loan borrower. Other FHA mortgage lenders may take on a FHA mortgage loan borrower with credit scores down to 620 FICO. Yet, a few mortgage lenders, like the investors I represent will not require any FHA Investor Overlays and will accept FHA mortgage borrowers with credit scores under 620 FICO Credit Scores . Those who are told that they do not qualify for a FHA Loan because they do not have credit scores of 640 FICO by a particular lender may not qualify with that particular lender but can qualify for a FHA Loan with another FHA approved mortgage lender that has no FHA Investor Overlays on FHA Loans like myself. If you are told that you do not qualify for a FHA Loan because your credit scores are not high enough, please call me at 262-716-8151 or email me at email@example.com.
FHA Lender Overlays On Debt To Income Ratios
Another major reason why many FHA mortgage loan borrowers do not qualify is due to high debt to income ratios. FHA Guidelines On Debt To Income Ratios for 2016 is capped at 43% DTI if the FHA borrower has credit scores below 620 FICO credit scores and the debt to income ratio requirements increases to 56.9% DTI back end and 46.9% DTI front end if the FHA mortgage loan borrower has credit scores of 620 FICO or higher. However, most FHA approved mortgage lenders do have FHA Overlays on debt to income ratios and may cap the debt to income ratios at 45%. Some FHA approved mortgage lenders will go high as 50% debt to income ratios on the back end. If you are told that you do not qualify for a FHA Loan due to the mortgage lender overlays on debt to income ratios, please contact me at 262-716-8151 or email me at firstname.lastname@example.org. I have no Investor Overlays on FHA Loans and will just go by the minimum FHA Guidelines On Debt To Income Ratio Requirements.