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!
Brett
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