July 18, 2018

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Articles in Category: Debt Ratios

Can I Use My GI Bill Housing Allowance For An FHA Home Loan?

Can I Use My GI Bill Housing Allowance For An FHA Home Loan?

Military borrowers who are considering an FHA home loan may wonder if they are permitted to use their Post 9/11 GI Bill housing stipend as part of their qualifying income for an FHA mortgage. FHA loan rules found in HUD 4000.1 require the lender to verify all sources of income for the borrower; verifiable income that qualifies may be counted in the borrower’s debt-to-income ratio. This process is important because if a borrower’s debts exceed a certain ratio compared to the amount of income, it may be harder for the lender to justify approving the FHA mortgage. So it makes sense that a borrower who qualifies for Post 9/11 GI Bill benefits or Forever GI Bill benefits might want to have their housing stipend included in the income they submit | more...

 
FHA loans for self-employed borrowers

FHA Loans For Self-Employed Borrowers

Are there FHA home loans for self-employed borrowers? There’s a persistent myth about FHA loans and self-employment; that working for yourself is a serious disadvantage when it comes to home loan approval. What’s the reality? FHA Home Loans Are Available For Financially Qualified Self-Employed Borrowers FHA loan rules in HUD 4000.1 state that being self-employed is an acceptable form of primary income as long as that income meets certain criteria. Borrowers will be required to furnish tax returns, business plans, profit-and-loss statements and other documentation as required by the lender to verify income. It may take some extra time to gather all the required information your lender needs, but you should come to the application or preapproval process knowing how your income has changed over time. Self Employment Minimum Requirements | more...

 
What You Need To Know About FHA Loan Applications And Loan Approval

What Goes Into Your FHA Mortgage Payment?

What goes into your FHA mortgage payment? It’s easy to assume that you’re paying principal and interest, divided by the number of months you are obligated to on the mortgage note. But is that really all that goes into your monthly mortgage bill? The short answer is no, there’s more to it than that. FHA Loan Rules For Debt-To-Income Ratios HUD 4000.1, the FHA single family home loan handbook, has instructions for the lender to help determine a borrower’s credit-worthiness. The lender doesn’t just calculate the amount of your income versus how much debt you have going out on a monthly basis-that debt ratio has to be calculated with and without the mortgage payment to see what percentage of your monthly income is taken up by debt. The formula is | more...

 
FHA Home Loans For Houses, Condos, And Townhouses 2

FHA Home Loan Resources You Should Know

FHA home loan resources you should know include online mortgage calculators, pre-qualification for a home loan, and the availability of free credit reports to help you in the research and planning stages of your new home loan or refinance loan. Get Your Free Credit Reports A Year In Advance Of Your Home Loan The government consumer watchdog agency, the Consumer Financial Protection Bureau (CFPB), reminds home loan applicants that they are entitled to “a free credit report every 12 months from each of the three major consumer reporting companies (Equifax, Experian and TransUnion)” according to the CFPB official site. Pulling your credit reports a year in advance is an excellent idea as it will give you plenty of time to deal with potentially outdated or inaccurate information, contest identity theft | more...

 
How Do Student Loans Affect My FHA Home Loan Application?

How Do Student Loans Affect My FHA Home Loan Application?

How do student loans affect my FHA home loan application? Some applicants worry about the amount of student loan debt they carry; after all the lender is required to determine the borrower’s debt-to-income ratio as a means to judge whether the loan is affordable or not. The debt ratio must be calculated using existing monthly debt, including student loans that are in forbearance. The fact that the loans are not being paid on at application time isn’t as critical as the idea that the loans may become a monthly obligation in the future, affecting the borrower’s ability to pay the mortgage loan. What do FHA loan rules say about student loans, and those student loans that are in deferment or forbearance? We use those two terms interchangably here, defined as | more...

 
Can I Get An FHA Loan With A Debt Collection In My Credit History?

FHA Home Loan Approval And Debt Ratios

How is FHA home loan approval affected by your debt ratio? Your credit qualifications including FICO scores and credit history are very important factors in home loan approval, but the amount of debt you carry is also a factor. Your participating FHA lender must evaluate your monthly debt versus your monthly income to determine if you can realistically afford the mortgage. How does the lender do this? The rules governing this process are found in the FHA loan handbook, HUD 4000.1. It begins by stating that the lender is required to “determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation”. The lender must review all monthly financial obligations but some things may not necessarily be included in | more...

 
FHA Loan Rules For Debt-To-Income Ratios: Business Debt

FHA Loan Rules For Debt-To-Income Ratios: Business Debt

FHA loan rules for debt-to-income ratios (DTI) include guidelines for the lender when the loan applicant has debts listed in his or her name, but those debts are actually those of the borrower’s business. What do you need to know about this type of debt? Before addressing that issue, it’s important to point out that debt ratios are a very important part of the FHA loan approval process. The higher the amount of your monthly debt compared to your monthly income, the harder your loan officer has to work to justify approving the loan. A borrower with too much monthly debt may be required to have compensating factors as a condition of loan approval. Those factors can be a larger down payment, substantial savings in cash, or other things as | more...

 
Do You Suffer From Home Loan Anxiety?

FHA Loan Rules For Income Verification: Part-Time Employment Income

Is it possible to be approved for an FHA home loan using part-time employment income? There are indeed FHA loan rules for this type of income and instructions to the lender for how it is to be reviewed. HUD 4000.1, the FHA home loan handbook, states that all verifiable income must meet certain FHA minimum requirements including the ability to verify two years of employment (not necessarily with the same employer). One area some borrowers may be concerned with in this area is part-time income. Does the FHA allow a lender to verify and count as income the earnings from a part-time job? The rules for this are found on page 200 of HUD 4000.1, which begins by defining what the FHA considers part-time income: “Part-Time Employment refers to employment | more...

 
FHA Home Loan Rules For Salary, Hourly, Part-Time Income

FHA Home Loan Rules For Salary, Hourly, Part-Time Income

Not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That’s why FHA home loan rules in HUD 4000.1, the FHA single family home loan handbook, include different instructions to the lender for a diverse range of income sources. FHA Loan Rules For “Primary Income” HUD 4000.1 has sections for hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” and defines it as follows: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” “Current Pay” Versus “Projected Pay” According to HUD 4000.1, FHA loan | more...

 
FHA Loan Rules For Loan Approval: Federal Debts and Tax Liens

FHA Loan Rules For Loan Approval: Federal Debts and Tax Liens

FHA loan rules for loan approval include instructions to the lender about unpaid federal debts and tax liens. Your chosen participating FHA lender is responsible for verifying your income, employment record, and your monthly financial obligations-which may include tax obligations such as a lien, or a federal debt. Unresolved taxes and federal debt can be a serious issue that will affect a home loan application. The status of such debt is one of the most important factors. According to HUD 4000.1, “Mortgagees are prohibited from processing an application for an FHA-insured Mortgage for Borrowers with delinquent federal non-tax debt, including deficiency Judgments and other debt associated with past FHA-insured Mortgages.” The FHA loan rules in this section also add that the lender is required to determine “whether the Borrower(s) have | more...