Qualification Criteria Changes For FHA Loans Effective The 15th Of September 2015 | Maine FHA Loans

One of the most common types of loans is FHA. Qualification criteria changes for FHA loans effective the 15th of September 2015 include several critical changes. Below are the key aspects of those changes.

Changes Relating to Income Categories

Income affects the loan amount for which you will qualify. There are a few changes regarding income.

  • Part-time Loan
    Borrowers working part-time must present documentation of pay for the last 2 years, the average of which may be used for calculations. If your earnings recently improved, an average of the most recent 12 months may be considered.
  • Overtime or Bonus Loan
    If you are able to document a two year history of overtime or bonus pay, then it can considered as additional pay.
  • Reduced Self Employment Loan
    For self employed persons whose income dropped by twenty percent or more, self-employment income may not be counted as qualifying income. Exceptions are allowed for extenuating circumstances if you can document stable or increased income during the last year.
  • Non-taxable Income
    Non-taxable income such as social security or disability may be considered but only up to 15 percent.

Employment History Changes

Multiple employment changes or gaps in employment status are reviewed. If you have changed employers 3+ times in the last year, then you must provide evidence that the moves were for training reasons or that you obtained higher pay and benefits each time. If you were unemployed for 6 or more months, you must prove that you received consistent pay over the past 6 months and some type of employment during the previous 2-years (not including training).

Handling of Debt

Loans are being evaluated much differently. Loans with less than 10 months left are not easily excluded from your monthly debt. Your remaining monthly payments must be less than five percent of your gross monthly pay. For deferred loans, the entire loan amount is interpreted as the monthly payment. Accounts where you pay off the entire balance each month are only excluded from debt if you have a one year history of full and on-time payments. If any late payments were submitted, then 5% of the balance will be counted towards monthly debt analysis. Lastly, accounts where you are strictly an authorized user may be disregarded if timely payments were made for that account over the past year.

Property Dependent Requirements

Changes apply to rental and mixed-use real estate. For multi-family properties, only 75% of rental income may be considered as qualifying income. Estimates are based on either actual leases or on appraisal assessments of possible rents. At least 51% of a building must be for residential use in order to qualify for an FHA loan.

Other Modifications

  • Money Received as Gofts – Gifted funds for down payment and/or closing costs must have been received from a family member, excluding cousins, nieces, nephews, and close friends. Funds given must be shown in bank statements.
  • More Than One FHA Loan – A second FHA loan is now allowed when moving more than 100 miles due to a job.
  • Streamline Refinancing – Streamline refinancing is permitted only if the monthly payment including principal, interest, and mortgage insurance does not increase more than fifty dollars a month.

Additional Information On The Qualification Criteria Changes For FHA Loans Effective The 15th Of September 2015

The qualification criteria changes for FHA loans effective the 15th of September 2015 described above impact FHA case numbers created on or after the 15th of September 2015. If you currently have a loan in process, then these changes should not apply to you. If you have not yet applied, then you may want to get started before the changes take effect. Failure to do so might lower your loan amount or make it more challenging to get approved for a loan.

About Mini Major

Mini views the purchase or sale of a home as a major life transition that usually evokes a wide array of challenges and emotions She brings her strong analytical, communication, and mediation skills to that process. For buyers, she helps to assess realistic goals and maps out a facilitation strategy that is uniquely designed to meet their individual styles with limited stress. For sellers, she provides honest, factual information necessary to set the right price and, together with the extraordinary resources of the Bean Group, provides state-of-the art marketing materials to present that property with appeal to the most appropriate potential buyers.

Ask a Question..

* indicates required field