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jfink46
92 Posts |
 Posted - 03/26/2008 : 2:12:36 PM
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OK, I haven't done an FHA loan forever. I have a client purchasing a condo and here are the specs:
$163,000 Loan Amount
792 credit score
$20,000 LIQUID reserves
self-employed - using 2006/2007 K-1 income
60% DTI ratio
Does this have any chance? |
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cpruitt
1527 Posts |
Posted - 03/26/2008 : 2:19:03 PM
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It would almost take less time run automated underwriting than to post the question on here.  Make sure you have the income figured correctly and it will probably work. Total Scorecard has tightened up a little lately but that probably has a chance. If it is referred, it would almost certainly need to be a payment similar to what the borrower is already paying in order to work. It would help if the underwriter knows you. |
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jfink46
92 Posts |
Posted - 03/26/2008 : 2:26:04 PM
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Thanks for the 411. Also, what is the FHA policy for paying off, or down, installment debt to qualify?
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uncleknute
120 Posts |
Posted - 03/26/2008 : 3:02:40 PM
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You should be able to do this loan. Even if DU doesn't take it, it will most likely get approved through a manual underwrite. I agree that a low or modest increase in housing expense makes a stronger case.
You can pay off installment debt to qualify FHA.
The Condo could be an issue. Is it a new build or existing condo? FHA has an approved condo list and there are quite a few more documents required if the condo is a new build and it is FHA approved.
I didn't notice what State the property is in but you must make sure that the loan amount does not exceed the FHA maximum loan for the County in which the property is located.
Email me if you have any other questions. |
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jtm7332
377 Posts |
Posted - 03/27/2008 : 07:50:05 AM
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| It is doable but they are getting harder. I had a fairly strong client get the loan kicked out for a 51 back end. To get the DTI down I attempted to pay the car down and the UW said that you can not pay down to qualify. It must have been a lender guideline because I am pretty sure that is not an FHA guideline. |
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jfink46
92 Posts |
Posted - 03/27/2008 : 07:56:04 AM
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| I have also been told that you must payoff debt to qualify if the monthly expense is over $100, and you CANNOT pay it down to qualify. |
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uncleknute
120 Posts |
Posted - 03/27/2008 : 3:23:15 PM
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jfink46,
In my first response I did not notice that you had asked to pay down OR pay off the loan. Here's how it works: If you pay an installment loan down to less than 10 months remaining, it does not have to be counted in the DTI as long as the payment does not materially affect the borrower's ability to make payments on the mortgage. This is a subjective standard since it is up to the underwriter and/or lender policy to determine what "materially affect ability to pay means". The $100 amount you were told is just somone's rule of thumb/policy and it makes sense because of the income profile of most FHA borrowers. There is no specific payment amount stated in the FHA guidelines but I absolutely expect lenders to thighten (if they have not already done so) their standards on the "pay down" side of the equation. |
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ehm3
780 Posts |
Posted - 03/27/2008 : 3:50:28 PM
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the key to short terming a dept with FHA is this: will it interfere with the ability to make the house payments? IE 6 mos left of a car payment, will that borrower have trouble making the house payment for those 6 mos? As said above it is subjective, rather than omitted completely as in Agency products.
with 20k liquid, I think you have a strong argument that the short term debt would not interfere with the house payment for those 6 or whatever months. |
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dkendall1979
6881 Posts |
Posted - 03/27/2008 : 3:59:22 PM
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Any reason you don't just go community-100 or Flex-100?
I'm about positive we could get this through DU/LP.
quote:
Originally posted by jfink46
OK, I haven't done an FHA loan forever. I have a client purchasing a condo and here are the specs:
$163,000 Loan Amount
792 credit score
$20,000 LIQUID reserves
self-employed - using 2006/2007 K-1 income
60% DTI ratio
Does this have any chance?
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