FHA Requirements
Debt-to-Income Ratio Guidelines
In order to prevent homebuyers from getting into a home they cannot afford, FHA requirements and guidelines have been set in place requiring borrowers and/or their spouse to qualify according to set debt to income ratios. These ratios are used to calculate whether or not the potential borrower is in a financial position that would allow them to meet the demands that are often included in owning a home.
The two ratios are as follows:
1) Mortgage Payment Expense to Effective Income
Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners' dues, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 31%.
See the following example:
2) Total Fixed Payment to Effective Income
Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners' dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 43%.
See the following example:
Please note that the above indicators do not exclusively determine whether or not a candidate will qualify for an FHA loan. Other factors will be considered, including credit history and job stability.
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FHA Loan Articles and Mortgage News
February 18, 2019 - Why would a first-time home buyer choose an FHA home loan to buy their first home with? Borrowers looking for a home with affordable monthly mortgage payments and no income limit should definitely explore their FHA mortgage loan options.
February 9, 2019 - Roughly 800 thousand Americans were directly affected in a financial way because of the government shutdown that began in 2018 and ended in late January 2019. Furloughs, delayed paychecks, no paychecks at all, and resulting financial difficulties were a hot topic of discussion.
February 3, 2019 - Should a borrower applying for a first-time home loan consider an FHA adjustable rate mortgage loan? Is it possible to save money with a new home loan that doesn’t have a fixed interest rate? FHA home loans are great choices for first-time home buyers, but the options may seem confusing at first.
February 2, 2019 - Why should a first-time home buyer get pre-qualified for an FHA mortgage? There are a variety of reasons to consider, but one of the most important is being able to see how much home you can afford and how much loan a lender is willing to offer you based on your credit score and history.
February 1, 2019 - A short sale may be used by home owners as a method to avoid foreclosure. Regardless of the motivation for the short sale, under certain circumstances there is a mandatory three-year FHA-required waiting period.
FHA.com Reviews
FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!
