Changes To FHA Home Loans As Of The 15th Of September 2015 | Waltham MA FHA Home Loans

One of the most common home loan programs is FHA. Changes to FHA home loans as of the 15th of September 2015 include some critical changes. Here are the key changes.

Employment History Requirements

Multiple job changes or gaps in employment history are evaluated. If you have moved employment more than 3 times in the past year, then you must furnish documentation that the moves were for training reasons or that you received higher wages and benefits each time. If you have a gap of 6 or more months in your employment history, you must confirm that you received consistent wages over the past 6 months and some history over the past 2-years (training does not qualify).

Debt Ratios

Debts are being viewed much differently. For loans with 10 or less months remaining, your remaining monthly payments must be less than 5% of gross monthly wages to be left off debt calculations. For deferred loans, the full loan amount is counted as the monthly payment. Accounts where you pay off the entire balance every month are only excluded as debt if you have a 12 month history of complete and on-time payments. If there were any late payments, then 5% of the balance will be viewed as debt. Finally, credit cards where you are merely an authorized user may be disregarded only if payments were made on-time over the past year.

Property Dependent Changes

Changes apply to rental and mixed-use properties. For rental homes, only 75% of rental income can be considered as qualifying income. Estimates are obtained from either signed leases or on appraisal projections of fair market rents. FHA home loans can only be issued for properties with at least 51% set for residential use.

Other Criteria

  • Gifted Funds – Gifted funds for down payment and closing costs must come from a family member. Cousins, nieces, nephews, and close friends are explicitly excluded as family members. Transfer of funds must be documented through bank statements.
  • Two FHA Home Loans – Multiple FHA home loans are now permitted if you are relocating more than 100 miles due to employment reasons.
  • Streamline Refinancing – A streamline refinance is allowed only if the monthly payment (principal, interest, and PMI) does not rise more than fifty dollars per month.

Changes to Income Qualification

  • Part-time Home Loan
    Part-time employees must document a 2-year history, the average of which may be used for home loan qualification. For individuals with recently improved wages, an average of the most recent 12 months may be considered.
  • Overtime or Bonus Home Loan
    If a borrower can provide a 2-year history of bonus or overtime wages, then it can considered as additional wages.
  • Lowered Self Employment Home Loan
    If you are self-employed and your income reduced by 20% or greater, self-employment income may not be counted as qualifying income. There can be an exception for extenuating circumstances only if you can prove consistent or increased income over the last year.
  • Other Sources of Income
    Non-taxable income such as disability or social security will be qualified but only up to 15 percent.

Other Criteria

  • Gifted Funds – Gifted funds for down payment and closing costs must come from a family member. Cousins, nieces, nephews, and close friends are explicitly excluded as family members. Transfer of funds must be documented through bank statements.
  • Two FHA Home Loans – Multiple FHA home loans are now permitted if you are relocating more than 100 miles due to employment reasons.
  • Streamline Refinancing – A streamline refinance is allowed only if the monthly payment (principal, interest, and PMI) does not rise more than fifty dollars per month.

Additional Information On Changes To FHA Home Loans As Of The 15th Of September 2015

The changes to FHA home loans as of the 15th of September 2015 in this article impact FHA case numbers issued home loan or later. If you are already qualified and received a case number, then the changes should not apply to you. If you are currently on the market for a house and intend to obtain an FHA loan, you should talk to your loan officer about the changes and if it changes your price range.