It’s About To Get More Difficult To Get Approved For FHA…

FHA is making it harder to qualify for financing if you have lower credit scores.

Starting April 1st, 2013 with Mortgagee Letter 2013-05 FHA has revised its guidelines for manually underwritten loans.

Here are three things you need to know about this update from FHA…

1) Manual underwriting is required for loans with a credit score less than 620 and a debt to income ratio greater than 43%.

2) Any compensating factor used to justify approval of a loan that exceeds ratios must also be supported by documentation.

3) Energy Efficient Mortgages may still be approved with a debt-to-income ratio up to 45% without compensating factors.

Note: It’s still possible to be able to use an automated approval with scores less than 620, but the debt to income ratio must be less than 43%.

If your scores are in the lower 600’s, and you have been considering purchasing a home then I would recommend you take action now. …because if you wait until April it could be more difficult for you to purchase!

That’s it for today!