A Way Around High Ratios On Manual FHA Loans…

If your loan officer is telling you that you would qualify for a manual FHA loan, if only your ratios didn’t exceed the FHA benchmark guidelines.

…don’t fret. There may still be hope for you.

If you can produce two of these compensating factors then you have a shot at overcoming a hight debt to income ratio on a manual underwrite.

Here is the list of Compensating Factors…

Compensating Factor	Description
Housing Expense Payments	Ability to pay housing expenses equal to proposed monthly over the past 12-24 months
Down Payment	Ability to make down payment of 10% toward the purchase
Accumulated Savings	Ability to accumulate savings, and conservative in using credit
Previous Credit History	Ability to devote a greater portion of income to housing expenses.
Compensation or Income Not Reflected in Effective Income	Income that is not reflected but directly affects his/her ability to pay the mortgage. i.e. food stamps and similar public benefits.
Minimal Housing Expense Increase	Only a minimal increase in the borrower’s housing expense.
Substantial Cash Reserves	Cash reserves at least three months worth after closing. Not equity in other properties, and proceeds from a cash-out refinance.
Substantial Non-Taxable Income	The borrower has substantial non-taxable income.
Potential for Increased Earnings	Potential for increased earnings, indicated by training or education in profession.
Primary Wage-Earner Relocation	The primary wage-earner is relocating, and the secondary wage-earner has an established employment history, is expected to return to work, and has prospects for securing employment in the new area.