November 23, 2017

Government FHA Mortgage Updates

Conservative long term financial mortgage options are available for Seattle home buyers. Many still choose the government program FHA home loan as the preferred financial option. In 2009 FHA made changes to the program guidelines so here are important updates to consider.


1.   After a chapter 7 bankruptcy you need a 2 year period before you can purchase unless of an exception case such as death, divorce, health conditions.


2.  If you filed for chapter 13, you must be in the process for a minimum of 1 year with no late payments.


3. If you have foreclosed on a property, you must wait 3 years to purchase a new home.


4. If you filed chapter 7 and included your home mortgage, you must wait a 3 year period to buy a new home. The 3 year process starts from the day the home is sold by the bank.


5. To help qualifying, if your installment loan (car, student loan) has less then 10 months remaining, it will not be counted towards qualifying. BUT if the payment exceeds $300 and will impact the ability to make the mortgage payment, the loan will need to be paid off.


6.  You do not need to pay off collection items or charge offs that show on your credit report. Those will negatively impact your credit score, so make sure you still qualify for a home loan.


7. 3 active trade lines for 12 months are required for qualifying or you can build alternative credit. Alternative credit is using utility bills, cell phone bill, etc.


8. To improve your credit scores, there is a program created to see if you pay off certain accounts or pay down balances if that will boost y our scores. Minimum credit score needed as of today is 620, before the interest rate increases.


9.  Child support may be used for qualifying income depending on your tax bracket.


10.  Child support has to be received for a minimum of 12 months and also needs to be documented that you will receive it for at least 3 more years.


11.  Self employed borrower must have 2 years tax returns for income qualification.


12.  Buying a new home and would like to finance with a FHA home loan. If you have 25% equity in the current home or relocating you can use rental income. If not you must qualify for both mortgages.


13.  If you are expecting a salary increase, you must have employer documentation stating it will be received within 60 days of closing.


14.  The standard Debt to Income ratios for FHA are 31/43, if you exceed these marks, compensating factors are needed.


15.  Non occupant co-borrower is not allowed for a cash out refinance up to 95%.


16.  Non occupant co-borrower is allowed for a purchase and rate & term refinances.


17.  Cash out refinances require no mortgage late payments in the past 12 months.


18.  You can have more then 1 FHA home loan under the following situations, increase home size, relocating, existing home LTV is under 75%, and if you are a non occupying co-borrower for someone else.

19.  Condominium project needs to be approved by HUD unless you can obtain a spot approval.

20.  2009 down payment is 3.5%


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