Qualifying For FHA Loans

The United States Housing and Urban Development, also known as HUD to most, control the Federal Housing Administration.  FHA loans are insured by HUD and enables FHA mortgage lenders to provide FHA loans.  FHA loans make homeownership possible to many Americans by only requiring a 3.5% down payment on a home purchase.  FHA loan programs also make homeownership possible to home buyers with less than perfect credit and those who have had an economic event in the past such as a bankruptcy and/or foreclosure as long as they have passed the mandatory waiting requirement between one and three years depending on the FHA insured mortgage program.  The Federal Housing Administration also offers FHA streamline refinance mortgage loans, FHA refinance mortgage loans, FHA cashout refinance mortgage loans, and home purchase loans to home buyers who are interested in 2 to 4 unit owner occupied multi unit properties.  FHA loans are only available to owner occupied properties only.  Second home and investment home financing do not qualify for FHA insured mortgage loans.

FHA Mortgage Lenders

The Federal Housing Administration is not a mortgage lender.  It is a government agency under the United States Housing and Urban Development that insures FHA approved mortgage lenders on all of their FHA loans they originate.  FHA mortgage lenders are private lenders such as banks and mortgage bankers that need to abide by FHA guidelines in orginating FHA loans in order to be insurable by FHA.

FHA Mortgage Lender Overlays

Each FHA mortgage lender has its own mortgage lender overlays.  Overlays are additional guidelines the mortgage lender has that surpasses the minimum FHA guidelines set by the Federal Housing Administration.  If you have minimal credit scores and prior credit issues, the best bet is to seek a mortgage broker who has access to wholesale FHA mortgage lender with minimal or no lender overlays and just go by the minimum standards of FHA guidelines.

Minimum FHA Mortgage Guidelines

Minimum FHA guidelines are the following:

1.  530 FICO scores to qualify.  Any mortgage loan borrower between 530 FICO and 579 FICO scores, 10% down payment is mandatory.

2.  580 FICO credit scores to 619 FICO credit scores, 3.5% down payment is required and maximum debt to income ratios cannot exceed 43% back end debt to income ratios.

3.  620 FICO credit scores and higher, 3.5% down payment and 56.9% debt to income ratios allowed as long as approve eligible per DU FINDINGS.

4.  2 year waiting period after a bankruptcy discharge;  3 year waiting period after foreclosure, deed in lieu of foreclosure, short sale.  Foreclosure and deed in lieu of foreclosure waiting period starts from the recorded date of the sheriff’s sale or the date the deed was transferred out of homeowners name into the mortgage lenders name.

5.  Open collections are allowed but restrictions with judgments and tax liens.  Home buyers with judgment and/or tax liens can qualify but they need a payment agreement with the judgment creditor or the IRS for tax liens and proof of a minimum of two months payment.   Proof is provided by providing mortgage underwriter two months cancelled checks.

6.  Rental verification may be required by providing 12 months cancelled checks to landlord unless the renter is renting from a property management company.  Then a letter from the property management company is sufficient.

7.  Re-established credit and no lates after bankruptcy and/or foreclosure may be required to get an approve eligible via Fannie Mae’s Automated Underwriting System.  Many FHA mortgage lenders may impose their own mortgage lender overlays such as a minimum of 3 to 4 credit tradelines for a minimum of 12 to 24 months.

8.  Needs to be owner occupied properties.  One to Four units.

9.   Gifts funds for down payment are allowed by the donor of the down payment needs to be a relative and there cannot be any repayment agreement are allowed.

FHA Condominium Loans: FHA Approved Condos Only

You can buy condominiums with FHA loans but only FHA approved condominium complexes or buidlings.  To see if the particular condo is FHA Loans approved, visit https://entp.hud.gov/idapp/html/condlook.

If you are looking for a FHA mortgage lender with no lender overlays, please contact me at 262-716-8151 or at www.gustancho.com .  I represent wholesale FHA mortgage lenders with no lender overlays and as long as you get an automated approval via Fannie Mae’s Automated Underwriting System and we can verify the information on your mortgage application, I can get you approved and closed on your FHA mortgage loan.

FHA Back To Work Extenuating Circumstances Due To An Economic Event Mortgage Program

FHA Back to Work Back to Work Extenuating Circumstances due to an economic event mortgage loans are now available in the continental United States.  The Back to Work Exenuating Circumstances due to an economic event mortgage programs shortens the waiting period to one year after a bankruptcy or foreclosure.  Please call me for more information.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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