Updated HUD Mortgage Guidelines On Home Purchase Loans


This ARTICLE On Updated HUD Mortgage Guidelines On Home Purchase Loans Was PUBLISHED On November 21st, 2019

What are Updated HUD Mortgage Guidelines On Home Purchase Loans

The U.S. Housing and Urban Development (HUD) is the parent of the Federal Housing Administration (FHA).

  • FHA is the federal agency that administers FHA loans
  • FHA is not a lender
  • It is a federal agency under HUD that insures and partially guarantees lenders in the event the FHA loans originated and funded default and goes into foreclosure
  • The role of FHA is to insure the loss sustained by lenders with the loan that defaulted
  • In order for FHA to insure the lender, the lender needs to follow all aspect of HUD mortgage agency guidelines
  • Updated HUD Mortgage Guidelines can change without notice
  • It is up to the individual lender to abide and follow Updated HUD Mortgage Guidelines

In this article, we will cover and discuss Updated HUD Mortgage Guidelines on FHA loans.

HUD Agency Guidelines Versus Lender Overlays

What are HUD Agency Guidelines Versus Lender Overlays

All lenders need to abide by the minimum agency HUD Mortgage Guidelines.

  • HUD can change existing FHA Guidelines anytime without notice
  • Once new HUD Guidelines are announced, it is up to the lender to implement it on new FHA case numbers
  • This is why it is very important for all lenders and loan officers to keep current on HUD Guidelines
  • All mortgage companies need to meet the minimum agency Updated HUD Mortgage Guidelines
  • However, lenders can have their own lender overlays
  • Lender overlays are additional lending guidelines that are above and beyond the minimum agency HUD Guidelines
  • Lenders can change their lender overlays anytime without notice
  • They do not have to notify HUD
  • It is perfectly legal to have lender overlays
  • This is why not all lenders have the same FHA mortgage guidelines
  • Most lenders will have lender overlays on FHA loans

Gustan Cho Associates is one of the very few national lenders with no lender overlays on government and conventional loans.

Latest Updated HUD Guidelines On FHA Loans

What are Latest Updated HUD Guidelines On FHA Loans

The lastest HUD Mortgage Guidelines is the HUD 4000.1 FHA Handbook.

  • The HUD 4000.1 FHA Handbook will list the latest Updated HUD Mortgage Guidelines
  • HUD can change the agency guidelines on a particular requirement anytime and can do it as many times as needed
  • HUD will release any changes to its agency mortgage guidelines on FHA loans
  • Lenders who miss the changes or new Updated HUD Mortgage Guidelines on new case numbers, their FHA loan will not get insured and/or saleable on the secondary market

It is the responsibility of private lenders to make sure they keep current with the lastest Updated HUD Mortgage Guidelines.

The Automated Underwriting System

Which means The Automated Underwriting System

All borrower’s files will go through the automated underwriting system.

  • The AUS will analyze the borrower’s mortgage loan application and credit report and render an automated decision
  • The AUS is a sophisticated automated system that has all of the newest and lastest updated HUD mortgage guidelines
  • If the findings render an approve/eligible, it means the borrower meets all the updated HUD mortgage guidelines and should get approved for an FHA loan with a lender with no overlays
  • However, lenders can add their own lender overlays on FHA loans
  • The AUS has the Single-Family Housing Policy Handbook 4000.1 programed in the system

Gustan Cho Associates has no lender overlays on FHA loans. We just go off the automated findings from the automated underwriting system (AUS).

Minimum Agency HUD Mortgage Guidelines

What are Minimum Agency HUD Mortgage Guidelines

The HUD 4000.1 FHA Handbook is almost 1,000 pages. We will cover the basic common lending guidelines. If you have any questions about a certain FHA Guidelines, please contact us at Gustan Cho Associates at gcho@gustancho.com or call and/or text us at 262-716-8151.

Here are the common HUD Guidelines on FHA Loans:

  • Borrowers can qualify for a 3.5% down payment home purchase FHA Loan with a 580 credit score
  • Borrowers under 580 and down to 500 FICO can qualify with 10% down payment
  • Gifted funds are allowed for the down payment and closing costs
  • 2 year waiting period after Chapter 7 bankruptcy discharged date
  • 3 year waiting period after foreclosure, deed in lieu of foreclosure, short sale
  • Borrowers can qualify for FHA loans during Chapter 13 bankruptcy repayment plan with Trustee Approval via manual underwriting
  • Chapter 13 bankruptcy does not have to be discharged
  • There is no waiting period after Chapter 13 discharged date
  • Any Chapter 13 bankruptcy discharge that has not been seasoned two years need to be manually underwritten
  • Manual underwriting need timely payments for the past 24 months
  • One or two late payments in the past 24 months is not a deal killer on manual underwrites
  • Outstanding collections and charged-off accounts do not have to be paid to qualify for FHA loans

There are over 1,000 pages on the HUD 4000.1 FHA Handbook. Please contact us at Gustan Cho Associates if you have any guideline questions.

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