New FHA Guidelines Starting September 14, 2015

Posted by: najirashid on Friday, September 4th, 2015
Deferred Student Loans:
 The old guidelines said we did not have to count student loan debt if we could show the student loans deferred for 12 months.  The new guidelines states they must be counted regardless of the deferment period.  Lenders will be required to use the actual payment for qualification or if the payment is unknown, 2% of the outstanding balance of the loan to calculate the payment.  
What does this mean for your buyers?  They will qualify for LESS because we have to count more debt against them if they have student loan debt.
 The old guidelines allowed charged off debt (debt that has been written off by the creditor) to be excluded without counting a payment against the buyer for it or requiring it to be paid prior to closing.  The new guidelines will still allow for it not to paid but will require lenders to document why the charge-off exists, document reason for approving the loan, obtain a letter of explanation and supporting documentation behind the charge-off.
What does this mean for your buyers?  Tougher underwriting guidelines that are not as forgiving and more documentation requirements for buyers with charge-off debt.  
Frequent Job Changes:
 The old guidelines allowed a buyer to change jobs multiple times as long as they were advancing in income or benefits.  The new guidelines state that if a buyer changes jobs more than 3 times in the prior 12 months or has changed their line of work the lender has to provide transcripts of training and education demonstrating qualification for the new position or employment documentation evidencing continual increases in income and/or benefits.
What does this mean for your buyers?  Tougher underwriting guidelines that require more documentation for someone who changes jobs frequently in the 12 months prior to a mortgage application.  
Installment Debt Less Than 10 Months:
 The old guidelines stated that an installment debt less than 10 months may be excluded from the buyer’s debt ratio. The new guidelines state that the debt may be excluded only if they have a cumulative payment of less than or equal to 5% of the borrower’s gross monthly income and the borrower may not pay down the debt to achieve this percentage.
What does this mean for your buyers?  Buyers may potentially not qualify for as much if they have installment debt that is ten months or less.


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