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
May 20, 2019 - In a tough economy borrowers worry about bankruptcy, foreclosure, and the effects such issues can have on the ability to borrow. So, what is the required waiting period for new FHA home loans after filing bankruptcy or foreclosure?
May 14, 2019 - Borrowers who want to apply for an FHA One-Time Close construction loan may, depending on the lender and circumstances, find that certain credit issues must be satisfactorily addressed as a condition of loan approval.
May 12, 2019 - Any property, tiny or not, that is not on a permanent foundation or will not be affixed to a permanent foundation as a condition of the loan will never be approved for an FHA mortgage loan. The reason for this is simple; if your home is on wheels, it cannot be classified as real estate.
May 11, 2019 - FHA cash-out refinance loans do require an appraisal, and borrowers who live in housing markets that are on the rise should check to see how far property values have increased since the last appraisal.
May 10, 2019 - First-time borrowers may wonder what steps they can take in the months leading up to a loan application that will help them get closer to loan approval. What does it take to get a lender to approve your mortgage loan application and put you on the road to owning your first real estate?
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!
