New Changes for FHA and USDA Loans

Some of the FHA & USDA changes will effect a borrower's loan process.  Buyers should be prepared to answer these questions for their lenders and understand most need documentation.

1. Q. Are you using gift funds as a part of this transaction?  Change: Gift Funds must be sourced (able to verify with documentation where funds came from) even if they are wired.

 2. Q. Do you have student loan debt?  Change:  Student Loan Payments if deferred or not, will have to be counted either with the scheduled payment due w hen out of deferment, or 2% of the total amount (Have documentation of total amount or current payments).

3. Q.  Are you authorized to use any accounts not in your name?  Change:  Have to be counted in the debt ratio unless you can get 12 months of cancelled checks from the owner on the account (showing he has made all payments). You cannot remove the account from the borrower's credit report as an alternative to documenting the payments.

4. Q. Do you receive Alimony and/or Child Support? (Voluntary or Mandated) Change:  Now accepted by FHA with 6 months receipt to payments.

5. Q. Do you have any accounts that require you to pay off each month?  (i.e. American Express) Change:  Can be omitted from the debt to income ratio with 12 months evidence of the balance being paid in full and on time. If unable to document 12 months in full and on time payments, 5% of the balance will be included in the debt to income. Borrower must have sufficient assets verified to pay the account balance in full in addition to what is needed to close on the mortgage.

6. Q. Have you changed employers or type of employment in last 12 months?  Change: If employee has changed jobs more than 3 times in the last 12 months or has changed line of work, it will be more difficult to document stability.

7. Q. Have you been unemployed for more than 6 months?  Change:  Will require at least 6 months on the new job before applying for FHA loan.

8. Q. Have you had a Short Sale, Foreclosure, and/or Bankruptcy?:  Rules are different for different types of loans so be sure to let your lender know about them and dates when they 9. Q.  Are you applying for a  USDA Loan?:  Change: The Up Front Mortgage Insurance Permian is increasing to 2.75, effective October 1st