Debt to income ratios of 38% for housing expense (mortgage payment +FHA insurance+monthly property tax and property insurance)
41% total monthly debt (above housing debt +all other car payments, credit cards etc..)
Credit score doesn’t enter into the decision, but as stated above they really want you to have a clean credit report for the last year.
They will allow you to submit a letter of explanation with your file if you’ve had circumstances that prevented you from making your payments on time (i.e. non-recurring medical issues, loss of income, etc.)
The above percentages might be a old as far as what FHA looks for, keep in mind that if you don’t meet any particular requirement you could use ‘compensating factors’ to still get an approval. Those would be things like the ability to show reserves (savings accounts or some liquid asset) can help your file get approved.
It’s a pretty long answer and the approvals vary depending on what each individual lender likes to approve. It’s probably easier to make sure you can afford the payment, can show some kind of savings account you’ve built up, have decent credit for the last year…and then go apply with a few different banks and mortgage brokers.
To find out specifically what you must do to raise your score, you can order your score report from all three national credit bureaus. In addition to your score
2011/09/26 at 22:52:52
The guidelines are pretty flexible on FHA loans.
Debt to income ratios of 38% for housing expense (mortgage payment +FHA insurance+monthly property tax and property insurance)
41% total monthly debt (above housing debt +all other car payments, credit cards etc..)
Credit score doesn’t enter into the decision, but as stated above they really want you to have a clean credit report for the last year.
They will allow you to submit a letter of explanation with your file if you’ve had circumstances that prevented you from making your payments on time (i.e. non-recurring medical issues, loss of income, etc.)
The above percentages might be a old as far as what FHA looks for, keep in mind that if you don’t meet any particular requirement you could use ‘compensating factors’ to still get an approval. Those would be things like the ability to show reserves (savings accounts or some liquid asset) can help your file get approved.
It’s a pretty long answer and the approvals vary depending on what each individual lender likes to approve. It’s probably easier to make sure you can afford the payment, can show some kind of savings account you’ve built up, have decent credit for the last year…and then go apply with a few different banks and mortgage brokers.
2011/09/26 at 22:35:39
To find out specifically what you must do to raise your score, you can order your score report from all three national credit bureaus. In addition to your score