FHA Guidelines

Determining Ratios:

· fha house Mortgage payments (including principal,interest, property taxes and property insurance) should be no more than 31% of the applicant’s gross monthly income

· Total monthly debts (including credit cards, auto loans, student loans, etc.) should be no more than 43% of the applicant’s monthly income.

· Appraisal: The property must be appraised with consideration given to all “sales concession” (including discount points, origination fees, interest rate buy downs, closing cost assistance, payment of condominium fees, builder incentives, down payment assistance, etc.).

· Credit: Credit scores above 620 generally qualify for the automated application process. Lower scores may be processed manually, including an interview with the applicant.

· Bankruptcy: Applicants who are still paying on a Chapter 13 bankruptcy may be eligible after one year. Applicants who are still paying on a Chapter 7 bankruptcy may be eligible after two years.

· Foreclosure: Those who have recently gone through a foreclosure are ineligible until after three years from the foreclosure date. In addition, the applicant must have reestablished good credit, have all civil judgments paid off, and have no remaining delinquencies on federal debts, such as taxes and student loans.

Before applying for a loan, be aware of the loan limit in your area. The FHA specifies how much may be loaned based on geographic location. See the Department of Housing and Urban Development website for more information.