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The 15th Of September 2015 Changes To FHA Home Loan Qualification Criteria | MA FHA Home Loans

One of the most used home loan programs is FHA. The 15th of September 2015 changes to FHA home loan qualification criteria include some critical changes. Here are some details.

Interpretation of Debt

Debts are being viewed a bit differently. For loans with 10 or fewer months left, the remaining payments must be below five percent of gross monthly earnings to be not considered as debt. For deferred loans, the full loan balance is interpreted as the monthly payment. Charge accounts are only excluded from debt if you have a 12 month history of complete and prompt payments. If there were any late payments, then five percent of the balance will be counted as debt. Finally, credit cards where you are merely an authorized user are excluded only if timely payments were remitted over the previous 12 months.

Investment and Mixed-use Buildings

Changes based on property type apply to rental and mixed-use real estate. For multi-family real estate, only 75% of rental income can be used as qualifying income. Calculations are obtained from either signed leases or on appraisal projections of reasonable rents. More than half of a property must be for residential purposes in order to qualify for an FHA home loan.

Changes to Income Calculations

  • Part-time Work
    Applicants who work part-time must provide verification of earnings for the last two years used for calculations. If your wages recently increased, an average of the past 12 months may be considered.
  • Overtime and Bonus Home Loan
    If you can document a 2-year pattern of bonus or overtime earnings, then that additional amount may included as additional earnings.
  • Lowered Self Employment Home Loan
    If you are self-employed and your earnings dropped by more than twenty percent, self-employment earnings will not be helpful for mortgage qualification. There might be an exception for special circumstances AND if you can prove consistent or elevated earnings for the last 12 months.
  • Other Sources of Income
    Non-taxable income such as disability or social security may be qualified but only up to fifteen percent.

Additional Changes

  • Money Gifted – Any home purchase money that were obtained as gifts must come from a family member, which excludes cousins, nieces, nephews, and close friends. Funds gifted must be documented through bank statements.
  • Two FHA Home Loans – More than one FHA home loan is now allowed if you are relocating 100 or more miles for a job.
  • Streamline Refinancing – Streamline refinancing is permitted in cases where the monthly payment (principal, interest, and PMI) rises less than fifty dollars per month.

Employment History Requirements

Frequent job moves or gaps in employment history are reviewed. If you have moved employment 3+ times during the last year, then you must provide documentation that the changes were for training purposes or that you attained greater earnings and benefits from each change. If there is a gap of 6 or more months in your employment history, you must confirm that you received consistent earnings over the past 6 months and some type of employment over the previous 2-years (excluding training).

Additional Changes

  • Money Gifted – Any home purchase money that were obtained as gifts must come from a family member, which excludes cousins, nieces, nephews, and close friends. Funds gifted must be documented through bank statements.
  • Two FHA Home Loans – More than one FHA home loan is now allowed if you are relocating 100 or more miles for a job.
  • Streamline Refinancing – Streamline refinancing is permitted in cases where the monthly payment (principal, interest, and PMI) rises less than fifty dollars per month.

Additional Information On The 15th Of September 2015 Changes To FHA Home Loan Qualification Criteria

The the 15th of September 2015 changes to FHA home loan qualification criteria in this article apply to FHA case numbers generated on or after the 15th of September 2015. If you currently have a home loan in process, these changes should not apply to you. If you are currently on the market for a home and intend to use an FHA loan, be sure to contact your loan officer about these changes and if it changes your price range.

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About Chris Graves

I grew up in Massachusetts, spent the majority of my young adult life in Boston, and own a home in Windham NH. I have owned properties in MA and NH. I specialize in mortgage lending in Massachusetts and New Hampshire and my company does have the ability to lend in other states. I graduated from the University of Massachusetts in Amherst Massachusetts in 2002. I have a Bachelor’s in Science. In addition to managing a team of loan officers my personal loan production is always in the top of the entire of company. I have personally been in the mortgage business for over 13 years. I pride myself with taking my clients from application to close in the smoothest and quickest way possible, while keeping them well informed during the entire process. I originate my own loans from start to finish and work hand in hand with my loan processors & underwriters to make sure I am updated to the minute with all of my files. I stay up to date with lending guidelines and speak with underwriters on a daily basis to ensure I am aware of all of the lending guidelines in place.

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