2014 FHA Loan Requirements
2014 brings new FHA insured mortgage lending requirements. If you are a Illinois or Florida home buyer, I can help you get you a FHA loan with a wholesale mortgage lender with no mortgage lender requirements. As long as you meed the new 2014 FHA loan mortgage lending guidelines and can get an automated approval either by Fannie Mae’s Automated Underwriting System and/or Freddie Mac’s Automated Underwriting System, you will get a FHA loan with a 3.5% down payment and your closing costs can be paid by the lender or you can get a sellers concession towards closing costs where all you need to worry about is the down payment. FHA has implement new rules and regulations for 2014 which may or may not affect home buyers. First of all, FHA set new maximum FHA lending limits where it lowered the previous FHA lending limit from $410,000 to $271,000 unless the subject property is located in high cost areas. FHA also toughen standards on collection accounts. Now, all collection accounts with balances of $1,000 or more do not have to be paid off but a 5% of the unpaid collection balance will be used towards the calculation of debt to income ratios. This rule only applies to non-medical collection accounts. Medical collection accounts are exempt from this FHA collection guidelines on residential mortgage loans. You cannot have a credit dispute on a derogatory item with a open credit balance. Again this only applies to non-medical derogatory items with unpaid credit balance. You need to retract the credit dispute in order for your mortgage loan application to proceed. Medical credit disputes does not apply.
Minimum Credit Standards For FHA Loan Approval
1. 530 FICO is the minimum credit score required to obtain a FHA insured loan. However, those mortgage loan applicants with credit scores between 530 FICO and 580 FICO will need to put a 10% down payment. For those who only want to put a 3.5% down payment on a home purchase, you would need a minimum of 580 FICO credit score.
2. No mortgage lender overlays. As long as HUD approves it via Automated Underwriting System, your FHA loan will close. Non-traditional credit lines are accepted.
3. 46.9% front end debt to income ratios/ 56.9% debt to income ratios. Most lenders will have overlays on the debt to income ratios. We do not. We go the maximum debt to income ratios allowed by HUD.
4. Sometimes home buyers have no traditional credit, therefore no credit scores. We can help those with no credit scores and no credit tradelines. Non-traditional credit lines are allowed. Non-traditional credit are credit such as utilities, cell phone, insurance payments, rental verification, and other credit where the creditors do not report it to the three credit reporting agencies.
5. $100 down payment for HUD owned homes. Also, escrow hold back.
6. Closing in 15 days.
7. Since we are mortgage brokers, we have wholesale lending relationships with dozens of wholesale mortgage lenders. We can offer you the best available mortgage rates possible, beating rates of any banks, credit unions, and mortgage bankers.
8. All pre-approvals are based on Automated Underwriting System FINDING. No pre-qualifications. Since we have no mortgage lender overlays, all mortgage approvals are based on Automated Underwriting System FINDING so once you get AUS approve/eligible, you can rest assured your mortgage loan will close.
9. Sellers can pay for buyer’s closing costs which includes taxes, insurance, and mortgage insurance premium. Maximum of 6% of sellers concession towards buyer’s closed is allowed for FHA loan.
10. 30 year and 15 year fixed rate mortgage loans available with no pre-payment penalty.
11. Can flip homes into FHA loan without the 91 day waiting period.
12. Only one borrower needs a credit score.
13. If you do not qualify based on income, non-occupant co-borrower allowed to qualify. No income is required from the borrower if they can get family member to be non-occupant co-borrower.
14. If you do not have down payment, gift funds are allowed by family member or very close friend who you have known for at least five years.
One Year Waiting Period After Bankruptcy Or Foreclosure: Back To Work Mortgage Program
HUD has launched the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program last fall where it shortens the waiting period for those who have had a prior bankruptcy or foreclosure to a one year waiting period. The FHA Back to Work Extenuating Circumstances due to economic event mortgage loan program are all manual underwrites and the mortgage loan applicant needed to have been out of work for at least six months and had a reduction of at least 20% in their household income. The fact that the mortgage loan applicant have been unemployed or underemployed needs to be the cause of the mortgage loan applicant for being out of work. The mortgage loan applicant’s credit history needed to have been good and the credit would have suffered during the period of the mortgage applicant’s economic event period and after gaining full employment, the credit needed to have been re-established. There should not be any late payments after the recovery of the bankuptcy, foreclosure, deed in lieu of foreclosure, short sale and job stability is required. Mortgage lenders will want to see proof and feel comfortable that the mortgage loan applicant will be employed for the next three years. A one hour HUD approved counseling course is required and a certificate of completion with the housing course counselor, signed and dated, needs to be provided. This counseling certificate is only good for six months. A FHA Back to Work Mortgage loan applicant cannot apply for a formal FHA Back to Work Mortgage loan until 30 days after the housing counseling course date of completion.