FHA Investor Overlays Versus HUD Agency Mortgage Guidelines

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FHA Investor Overlays Versus HUD Agency Mortgage Guidelines

This Article On FHA Investor Overlays Versus HUD Agency Mortgage Guidelines Was PUBLISHED On July 9th, 2019

FHA Investor Overlays Versus HUD Agency Mortgage Guidelines

What Are FHA Investor Overlays?

  • FHA Investor Overlays are additional mortgage lending guidelines that are imposed and required by individual mortgage lenders that surpass the minimum HUD Agency mortgage lending guidelines set by the United States Department of Housing and Urban Development (HUD)
  • Just because a borrower meets the minimum HUD Agency Guidelines to qualify for an FHA loan does not mean a lender will qualify, approve, and fund the FHA Loan
  • Lenders can have their own set of requirements called FHA Investor Overlays
  • There are certain lenders such as Gustan Cho Associates
  • We specialize in originating and funding FHA Loans with no FHA Investor Overlays
  • There are many types of FHA Investor Overlays a lender can impose
  • However, we will cover the most common FHA Investor Overlays that affect borrowers

In this blog, we will discuss FHA Investor Overlays Versus HUD Agency Mortgage Guidelines.

FHA Investor Overlays On Credit Scores

FHA Investor Overlays On Credit Scores

FHA Loans have minimum credit score requirements:

  • FHA Credit Score Requirements require a minimum of 580 credit scores for a 3.5% down payment FHA loan
  • HUD allows for borrowers with credit scores between 500 and 579 FICO to qualify for an FHA loan
  • However, a 10% down payment is required
  • These are the minimum credit scores required by HUD to qualify for an FHA Loan
  • Lenders do not have to accept the minimum Credit Score Requirements and can have FHA Investor Overlays
  • Lender Overlays are higher standards than those of FHA Agency Guidelines
  • Most lenders will have FHA Investor Overlays on credit scores where they will require a minimum credit score requirement of 640 FICO
  • Other lenders may take on a borrower with credit scores down to 620 FICO.
  • Yet, a few 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 an 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 an FHA Loan with another lender with no FHA Investor Overlays

If you are told that you do not qualify for an FHA Loan because your credit scores are not high enough, please call me at 262-716-8151 or email me at gcho@gustancho.com.

FHA Lender Overlays On Debt To Income Ratios

FHA Lender Overlays On Debt To Income Ratios

Another major reason why many borrowers do not qualify for FHA Loans is due to high debt to income ratios. FHA Guidelines On Debt To Income Ratios for 2019 is capped at 43% DTI if borrowers have credit scores below 620 FICO. The debt to income ratio requirements increases to 56.9% DTI back end and 46.9% DTI front end if the borrower has credit scores of 620 FICO or higher. However, most lenders do have Overlays on debt to income ratios and may cap the debt to income ratios at 45%. Some lenders will go high as 50% debt to income ratios on the back end. If you are told that you do not qualify for an FHA Loan due lender overlays on debt to income ratios, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email me at gcho@loancabin.com. Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no Investor Overlays on FHA Loans. We just go by the minimum FHA Guidelines On Debt To Income Ratio Requirements.

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