Florida FHA loan requirements 2017

Do you want to know Florida FHA loan requirements?

The Federal Housing Administration insures FHA loans and did not used to require a minimum credit score. The new FHA policy changes requires a minimum credit score of 580 for 3.5% down payment and anyone purchasing a home with a score lower than 580 will require 10% down payment.

Minimum credit score

FHA allows a borrower with a credit score of 580 to buy a home with only a 3.5% down payment. FHA guidelines allows a borrower with a minimum credit score of 580 to buy a home using their own funds for a down payment or the down payment funds can be a gift from a family member.

FHA guidelines allows a home buyer with a minimum credit score above 580 up to a 6% seller concessions. The seller concessions must be written into the sales contract.

FHA requires a minimum credit score of 500 for all loans

Home buyers with a credit score below 580 are required to make a 10% down payment. The down payment funds can belong to the borrower or can be a gift from a family member. Up to 6% seller concessions are allowed. 

What is the maximum allowable debt-to-income ratio on FHA loans?

The maximum debt to income ratio is 55% with higher credit scores. Above 580 credit score is 50% and below 580 credit score is 43%. Borrowers with a credit score above 580 can exceed a 43% debt-to-income ratio with compensating factor.

• 500-579 credit score 31/43%
• 580 and above 40/50%
• Florida FHA loan requirements
  

Acceptable compensating factors

1. Verified and documented cash reserves equal to at least three total monthly mortgage payments (1-2 units) or six total monthly mortgage payments (3-4 units).

2. New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and a there is documented twelve month housing payment history with no more than one 30 day late payment.

In cash-out transactions all payments on the mortgage being refinanced must have been made within the month due for the previous 12 months

3. Residual Income

Florida FHA loan requirements 2017 

FHA debt to income ratio are the calculations underwriters use to determine whether a borrower can qualify for a mortgage. They are used to determine if you have the capacity to repay your mortgage.

There are two calculations.

• The first or Front Ratio is your housing expense-to-income ratio. This is your proposed mortgage payment (principle, interest, taxes, mortgage insurance, and home owners insurance) divided by your gross monthly income.
• The second or Back Ratio is your total monthly obligations-to-income ratio. This is your gross monthly payment including Mortgage PITI divided by your gross monthly income.

FHA loan requirements include a maximum debt to income ratio. When a borrower applies for an FHA mortgage, they are required to disclose all debts, open lines of credit, and all possible approved sources of regular income. Using this data, the bank and the FHA calculate the borrower's debt-to-income ratio.

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