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.
FHA Loan Requirements
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FHA Loan Articles and Mortgage News
March 5, 2021 - HUD originally announced a COVID-19-related foreclosure moratorium in March of 2020. Since that time the agency extended the deadline to apply for relief multiple times. Extended foreclosure and eviction moratoriums now expire June 30, 2021.
March 2, 2021 - With a 2021 winter disaster to deal with, home owners across many states including Texas, Oklahoma, and elsewhere are looking at home repairs and renovation as part of disaster recovery. Other homeowners may need a home repair or upgrade no matter what kind of winter they are having.
March 1, 2021 - Those with FHA mortgages who own homes in the state of Texas are getting help from the federal government in the wake of deadly winter storms in the area affecting some half a million homeowners in the Lone Star State.
February 23, 2021 - If you want to build a home on your own lot using a One-Time Close construction mortgage, one thing you’ll be required to do is hire a contractor to do the work. One-Time Close (OTC) loans are different than other home loans that involve using a builder, performing rehabilitation or repair work, etc.
February 22, 2021 - HUD issued a memorandum indicating that will interpret the Fair Housing Act to bar discrimination on the basis of sexual orientation and gender identity and directing HUD offices and recipients of HUD funds to enforce the Act accordingly.
