HUD FHA 203K Loans Manual Underwriting Guidelines

This Article Is About HUD FHA 203K Loans Manual Underwriting Guidelines Was Written By Michael Gracz And Alex Carlucci Of Gustan Cho Associates

HUD FHA 203K Loans Manual Underwriting Guidelines permit manual underwriting on FHA Loans.

• Most lenders do not allow manual underwriting on FHA 203k Loans although HUD FHA 203K Loans Manual Underwriting Guidelines allows it
• One of the factors why FHA Loans needs to be downgraded to manual underwriting is for home buyers who are in an active current Chapter 13 Bankruptcy Repayment Plan or those who just got a Chapter 13 Bankruptcy discharged and does not have 2-year seasoning
• HUD Chapter 13 Bankruptcy Guidelines require 12 months have been completed with timely payments to Trustee to qualify for FHA Loans
• However, it needs to be manually underwritten
• There is no waiting period after Chapter 13 Bankruptcy discharged date to qualify for FHA Loans
• Anyone who has less than two years seasoning of their Chapter 13 Bankruptcy discharge needs to be manually underwritten

HUD FHA 203K Loans Manual Underwriting Guidelines allows for borrowers in a Chapter 13 repayment and/or with a recent Chapter 13 discharge to qualify for FHA 203k Loans with manual underwriting.

Cases Where Manual Underwriting Is Required

There are many reasons the AUS (Automated Underwriting System) will not give an Approve / Eligible findings report.

Some of the most common reasons are the following:

• bankruptcy within the past two years
• late payments on a mortgage account
• Housing events such as foreclosures, short-sales, or deed-in-lieu on credit
• decline in income

If borrowers Automated Underwriting System  (AUS) report comes back with Refer / Eligible findings, FHA home loan can still be insured by HUD. We can still close that loan!! However, it must pass manual underwriting.

What Is Manual Underwriting

What items are looked at during manual underwriting?

-To determine creditworthiness:

• Credit History – From a TRI-MERGE Credit Report
• Liabilities
• Debts
• Rental Payments
• Mortgage Payments
• Debt-to-income Ratios
• Credit Score

The underwriter is responsible to manually underwrite in compliance with HUD requirements.

• They must determine if the layered risk is involved
• Each vial is to be reviewed as a separate and unique transaction, meaning no to manually underwritten loans are the same

Below are a few excerpts directly from the FHA:

As more and more lenders add overlays to their mortgage products, less and fewer companies participate in manual underwriting. The good news is we specialize in manual underwriting. Gustan Cho Associates Mortgage Group has the ability to MANUALLY UNDERWRITE FHA 203K LOANS. Finding a company who does both FHA 203K loans and manual underwriting can be a challenge. Reach out to the Gustan Cho Associates Mortgage News for making the dream home ownership a reality!

What Types Of Renovations Can Be Done With FHA 203k Loans

What are some common renovations?

• Adding complete additions to your property
• Upgrading kitchens and bathrooms, or any other room
• Roofing, gutters, downspouts
• Redoing Plumbing work
• Landscaping improvements
• Accessibility options for the disabled
• Energy Efficient Improvements

The FHA 203K program allows you to make your new home your DREAM home before you even move it. You have the ability to finance up to six payments into your loan amount if you cannot live in the home while the renovations are being completed. You should see some of the before and after photos of an FHA 203k loan. Borrowers have the ability to do amazing renovations.

HUD FHA 203K Loans Manual Underwriting Guidelines And Mortgage Process

1. Once the real estate purchase offer is accepted by the seller, the home buyer will reach out to a HUD 203K Consultant.
   1. Use this link to find an FHA CONSULTANT in the area near the proposed home purchase:
2. Pick a contractor
   1. may want to research more than one reputable contractor
   2. please remember the homeowners are in control
   3. make sure you’re getting the best quote
   4. more importantly, make sure they can get the work done on time
3. Once homeowner have selected the contractors they would like to use, they will set up a meeting with HUD 203k consultant and the contractor
   1. They will coordinate each project and finalize the estimate for the renovations
4. Complete the first appraisal
   1. during the process, there will be one appraisal before the project
   2. and another appraisal after the projects and verify completion
5. Once the lender has received the first appraisal the mortgage process will be very similar to a regular mortgage process
   1. Homeowners will want to keep in contact with their lender, contractor, and HUD 203k consultant
   2. Homeowners would want to confirm all inspections and payments are happening at the appropriate time
6. After all, projects are completed, the second appraisal will be ordered
   1. Once received, the home is yours and all projects are completed!!!

Reach out to the Renovation Pros from the Gustan Cho Associates!

FHA Cash-Out Mortgage Guidelines During And After Chapter 13 Bankruptcy

Homeowners with equity in their homes can do a cash-out refinance a mortgage on FHA Manual Underwriting Refinances during and after Chapter 13 Bankruptcy. However, if borrowers do an FHA Cash-Out Refinance Mortgage during a Chapter 13 Bankruptcy Repayment Plan, the Trustee may require that the Chapter 13 Bankruptcy debtors be paid with the proceeds. This is not the case with doing an FHA Cash-Out Refinance after Chapter 13 Bankruptcy discharge date. Any bankruptcy discharge seasoned less than 2 years need to be manually underwritten. Borrowers can do a cash-out refinance on manually underwritten FHA Loan at Gustan Cho Associates.

Finding And Choosing FHA 203k Lender With No Overlays Who Can Do Manual Underwriting

Michael Gracz is the author of this blog on HUD FHA 203K Loans Manual Underwriting Guidelines. Mike Gracz is also a contributing editor of Gustan Cho Associates Mortgage News. Michael has a national reputation of being able to do mortgages other lenders cannot do due to being represented by a national direct lender with no overlays on government and conventional loans. Mike Gracz is an expert with HUD FHA 203K Loans Manual Underwriting Guidelines and is available 7 days a week, evenings, weekends, and holidays. Alex Carlucci is a senior vice president of Gustan Cho Associates and an expert in all government and conventional loan programs.  Please reach out to Mike Gracz at 630-659-7644. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.