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New FHA Requirements

  • Borrowers without a credit score
  • "Refer" scoring recommendation
  • Underwriter downgraded "Refer" where total score was "Accept"
  • Back to Work Program
  • Credit Qualifying Streamline Refinance

Changes for manual underwriting requirements:

Item Reserve Property Type Requirement
Increased Cash
Minimum 1-2 unit 1 month mortgage payment.
3-4 unit 3 months mortgage payments.
Max DTI 40/50%. with compensating Factors. 1-2 unit 3 months reserve.
3-4 unit 6 months reserve.
Maximum Ratios Credit based. FICO < 579 Maxi DTI 31/43%
FICO > 580 Max DTI 37/47% with (1)*
FICO > 580 Max DTI 40/50% with (2)*

* Compensating Factors.

  1. Verified and documented cash reserves equal to at least three total monthly mortgage payments(1-2 units) orsix 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 there is a documented twelve month housing payment history with no more than one 30 day late payment.
  3. In cash out transactions all payments on the mortgage being refinanced must have been made within the month due for the previous 12months.
  4. Verified and documented significant additional income that is not considered effective income. (i.e. part time or seasonal income verified for more than one year but less than two years)
  5. Residual Income

The new FHA manual underwriting requirements DO NOT apply to:

  1. Rated "Accept"
  2. Non-credit qualifying FHA to FHA streamline refi
  3. Refi to Negative Equity Positions
  4. Section 255 Home Equity Conversion Mortgages
  5. Title I loans

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