Federal Housing Administration (FHA)
Federal Housing Administration (FHA) is still the go-to program for borrowers with lower credit scores and/or minimal credit history. There are many benefits to qualifying for a FHA mortgage such as 3.5% minimum down payment, and Down Payment Assistance (DPA) programs from various agencies such as CHAC & CHFA that are typically allowed with many wholesale lenders.
Qualifying for a FHA Mortgage
Federal Housing Administration (FHA) does not have interest rate price adjustments for low credit scores, whereas a credit score below 680 on a conventional loan has overlays and price adjustments. In such cases, the FHA loan will offer a much lower interest rate and possibly an overall lower monthly payment. Generally speaking, if your credit score is between 580 and 660, a FHA loan may be the best option.
- FHA loans allow credit scores down to 550 FICO scores with AUS approval
- Max DTI Ratios per AUS approval for 600+ FICO borrowers
- Non-traditional credit permitted on manual underwrites
- Non-occupying co-borrowers allowed with family members up to 96.5% LTV on purchases
- Max DTI Ratios of 31/43 for 550 – 599 FICO borrowers
- Manual Underwrites will allow for higher ratios above 31/43 on 600+ FICO borrowers with Compensating Factors
- NO Income Verified and NO Max LTV / CLTV on FHA Streamlines (refinances)
- 580+ FICO scores allowed on Non-Credit Qualified Streamlines (mortgage-only credit history)
- FHA Streamlines allow for 2nd Home & NOO occupancy types, and NO appraisal required
- Refer to FHA-HUD Policy Handbook 4000.1 regarding underwriting guidelines
Contact Dave Kevelighan regarding Federal Housing Administration (FHA) scenarios & pricing today!