Consumers are becoming more and more educated these days. Some clients even quote me guidelines. I blame myself. After all I’m the one posting these online. Believe it or not, I love educated clients. It makes my job easier. It also means their reading my posts!
But for those of you savvy borrowers out there, here’s a list of compensating factors for FHA borrowers whose debt-to-income ratios exceed benchmark recommendations.
- The borrower has successfully demonstrated the ability to pay housing expenses great than or equal to the proposed monthly housing expenses for the new mortgage over the past 12-24 months.
- The borrower makes a large down payment of 10% or higher toward the purchase of the property.
- The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward using credit.
- Previous credit history show that he/she has the ability to devote a greater portion of income to housing expenses.
- The borrower receives documented compensation or income that is not reflected in effective income, but directly affects his/her ability to pay the mortgage. This type of income includes food stamps, and similar public benefits.
- There is only a minimal increase in the borrower’s housing expense.
- The borrower has substantial documented cash reserves (at least three months worth) after closing.
- Substantial non-taxable income.
- Potential for increased earnings as indicated by job training or education in his/her profession. Think doctor in residence, not salesperson.
- The home is being purchased because the primary wage-earner is relocating, and the secondary wage-earner has an established employment history, is expected to return to work, and has reasonable prospects for securing employment in a similar occupation in the new area.
Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & WI DFI
The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.
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