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
August 14, 2018 - You can spot a credit repair scam by asking a few simple questions and looking out for the tell-tale signs of the scam artist. Those signs include pressure for up front payment and the general inability to answer specific questions about the services being offered.
August 12, 2018 - FHA cash-out refinance money is good for any purpose the borrower wants to use it for; the cash-out refi loan is different in that respect than a refinance loan to rehab a house (FHA 203(k) loans, for example) or to purchase and rehab a home.
July 25, 2018 - For those who want to purchase a home to share, there are several options that may be considered with an FHA mortgage. They include having several co-borrowers, with the caveat mentioned above that all applicants must financially qualify.
July 22, 2018 - FHA home loans come with a minimum down payment requirement which an vary depending on the borrower’s credit scores, lender requirements, and other factors. The smallest down payment possible on an FHA mortgage loan for a new purchase is 3.5% of the adjusted value of the home.
July 21, 2018 - That question gets a different answer depending on the housing market you live in, but some published reports claim some renting hotspots such as those in Orlando, Florida and Salt Lake City, Utah are seeing rental increases in ranges as high as $800-$1,000 more per month with a renewed lease.
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!
