FHA Mortgage Loans Guidelines

For Purchase Or Refinance

FHA home loans are government loans with lenient credit checks; however, there are some guidelines to be able to receive a FHA mortgage. The person trying to qualify will need their debt to income ratio to fall within the FHA requirements before they are approved. FHA loans are approved by computers and humans allowing each loan to be looked at individually where sometimes exceptions can be made. The debt to income ratio displays a person's debit and income in the form of a fraction (ratio). The FHA guidelines show that the maximum percentage can be 29. A potential FHA borrower could make $3400 per month and their home expenses could be $1000 per month to make the top ratio number 29 (29% of their income will be used for their home expense). The bottom number displays all of the person's debt, including new house payment, car payments, other loans, child support, and credit card payments and compares it to their income. This makes the debt to income ratio 29/41. Other FHA guidelines are that a FHA borrower must hold mortgage insurance on the home, and there are loan maximum amounts that will depend on the county, state and type of home. There are not written in stone FHA guidelines for past employment history. Frequent job changes normally show instability, but exceptions are made when the changes are within the same line of work with increases in pay.

FHA Home Loan Guidelines - 3 Major Changes Coming!

FHA Home Loan Guidelines will be changing in the near future. They are a few changes that may cost you more to get a FHA Loan and may prevent you from qualifying for a mortgage.

Change To The Amount of Mortgage Insurance Premium Cost.

One of the biggest announced changes to the FHA Policy is to Mortgage Insurance Premium (MIP). Mortgage Insurance Premium will be increased to help build up the capital reserves and bring back private lending. The first step of the change will raise the up-front MIP from 1.75% to 2.25% of the loan amount. They

are also planning on asking Congress for legislative authority to increase the maximum annual amount of MIP they can charge. The shift will help the capital reserves to increase without having much impact on the borrower because the annual Mortgage Insurance Premium is paid over the life of the loan instead at closing. This change should go into effect some time in the spring of 2010.

Change To Minimum FICO Credit Scores.

In reality most lenders are currently requiring at least 620 FICO score to quality for FHA's 3.5% down payment.

Reduction Of The Amount Of Allowable Seller Concessions.

This  change also will be posted in the Federal Register in February and after a required notice and comment  period it will probably go in effect in the early summer.These changes in the FHA Home Loan Guidelines could cost you your chance of getting a low down payment FHA mortgage. FHA Home Loan Program is a great way to finance your new home with a very low down payment of just 3.5% and low credit scores. But things are changing with the FHA Home Loan Guidelines, you need to take action now to find your dream home now!