Good News for Home Buyers
FHA Loosens its Guidelines
The FHA recently announced changes to its guidelines that will make it easier for home buyers to qualify for their home loans.
Previously, lenders were afraid to approve "make-sense" loans because the FHA guidelines were not clear in calculating the buyer's maximum allowable debt. Now, the FHA has clarified these limits, which should give lenders the confidence they need to approve more loans. With these changes, Drew Mortgage will now look at borrowers down to a 580 FICO score based on compensating factors on a borrower's credit profile and certain qualifying ratios.
What does this mean for home buyers?
With this update, FHA has made it easier for more buyers to qualify for an FHA loan, meaning sellers have an expanded pool of buyers. This is great news, as FHA remains the most flexible and affordable loan program for buyers with less than a 5 percent down payment. A reminder a gift can be obtained for the down payment. A seller can also give a sales concession up to 6% of the sales price to offset a borrowers closing costs and prepaid escrows.
As a direct FHA lender, Drew Mortgage will look at these loans with "common-sense" underwriting based on a borrower's credit profile, what circumstances can be documented to have caused past lates and other compensating factors such as reserves after closing, job history, housing payment history (i.e. canceled rent checks showing paid on time for 12+ months) and/or other positive merits of the borrowers loan profile.
So, today we can look at any borrower with a FICO down to 580 under our FHA program and hopefully qualify more borrowers for purchases of homes and/or refinances.