FHA Guidelines

FHA Requirements:                                                                  

•   Owner occupied, full doc, 1-4 Unit, Condo and PUD properties only.      
•   Maximun loan size requirements vary and are determined by state and county. See (www.hud.gov) for specific information.
•   Max LTV 96.5% on purchase 1-4 unit and no cash out refinance. 
•   Max LTV 95% on cash out refinance on 1-2 unit properties (cash out and debt consolidation are treated the same) 
•   Must own and occupy property at least 1 year with no lates or max 85% / non-occupant co-borrower 
•   Max LTV 85% on 3-4 unit properties, loans with mortgage lates and properties owned less than 1 year. 
•   The lesser of appraised value or original purchase price will be used when property has been owned less than 90 Days 

FHA Guideline Summary- Full Doc     

•   4506 required on all loans
•   Wage Earner - 2 years W2's and current pay stub (4506 is required and checked prior to close)
•   Self Employed Sole Proprietor/1099 commissioned 
•   2 years signed and dated tax returns (all schedules)
•   Self Employed Partnership, LLC or S Corp
•   2 years signed and dated personal and business tax returns (all schedules)
•   YTD P & L from accountant
•  2 years continuous employment necessary for primary borrower (does not have to be same job
• Part-time jobs for any borrower must have 1 year minimum continuous employment
• W-2 Employees can apply with 30 days worth of Pay stub and explanation

FHA Guideline Summary- Assets

• NO Reserves but must of 3 months PITI to compensate
• Refi- Not Required
• Purchase- 3 months PITI(S & S for 3 months) required on 3-4 units only
• Purchase Down Payment/Funds to close
• Must have minimum 3.5% into transactiondown payment can borrowers own funds, gift or a grant 
• Funds must be seasoned minimum of 2 months with any large deposits sourced and explained
• Gifts are allowed from immediate family member, employment or friend
• Gift letter, proof of funds (S & S in donor's account for minimum 2 months) and transfer( certified check and deposit into borrowers account) are required
• Seller allowed to contribute 6% of sale price toward closing cost and pre paid accounts
• Down Payment assistance programs are allowed (see approved list)

FHA Guideline Summary- Credit

• No minimum credit score
• Tri-merge credit bureau is required
• Limited or no credit borrowers are considered
• Use alternative - 3 tradelines for 12 months
• Explanations (from the borrower) are required on; All lates in last 2 years; All major lates beyond last 2 years
• Secured borrowing such as 401k is not inluded in DTI
• Collections and judgements may not have to be paid if they are>12 months old, unless they effect title or are court ordered. Tax liens may be left open if they are subordinated and included in DTI
• Last 12 months mortgage history must be shown on credit report, documented via institutional VOM or 12 months cancelled checks
• Last 12 monts rental history mayt be documented via 12 months cancelled checks
• 3 years seasoning required on foreclosure/NOD deed in lieu (extenuating circumstances considered as exception)
• Community property states require that DTI includes debts of any non-borrowing spouse.

FHA Guideline Summary- Past BK

• Chapter 7: 2 years discharged; Exception for 1 year with extenuating circumstances beyond customer control (illness,loss of job,etc. and proof ; No derog since BK
• Chapter 13: 1 year since filing; Discharged already or through closing (considered cash out if closing) ; Perfect pay on BK and no other derog since
• CCCS: 1 year since filing; On time CCCS payments

FHA Guideline Summary- Other

• Borrower may not have defaulted on any prior government loans (exceptions can be considered if the borrower has now rectified the debt with the government).   
• Borrower may be delinquent on current non-government ARM loan if reason for delinquency is ARM re-set 
• Debt ratio guidelines are 42/47 (exceptions can be made with AU approval or comp factors).
• 6% seller concessions on purchase loans
• Non-occupant Co-Borrower is acceptable(max LTV 85% on cash out refi)
• Non-permanent resident aliens are acceptable
• Unlimited cash out refinance

 FHA Upfront and Monthly MIP

• Upfront MIP-Borrowers are required to pay an upfront, one time fee of 1.5% of the base loan amount
• Monthly MIP-is .55%x loan amount divided by 12 (borrower will pay every month) on loans >15 yrs. 15 yrs. and less is .25%x loan amount divided by 12
• For mortgages with terms 15 years and less and with Loan to value ratios 90 percent and greater, annual premiums will be canceled when the Loan to Value ratio reaches 78 percent regardless of the ammount of time the mortgagor has paid the premiums
• For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be cancelled when the Loan to Value ratio reaches 78 percent , provided the mortgagor has paid the annual premium for at least 5 years
• Mortgages with terms 15 years and less with Loan to Value ratio of 89.99% and less will not be charged annual mortgage insurance premiums