Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price. Additionally, the borrower must have sufficient funds to cover borrower-paid closing costs and fees at the time of settlement.
Funds used to cover the required minimum downpayment, as well as closing costs and fees, must come from acceptable sources and must be verified and properly documented.â€
â€¢ federal income tax returns for the most recent two years, both individual and business, including all applicable schedules, for self-employed borrowers,
â€¢ individual federal tax returns for commissioned individuals. â€
â€œThe relationship of total obligations to income is considered acceptable if the total mortgage payment and all recurring monthly obligations do not exceed 43% of the gross effective income.
When the decision credit score is:
â€¢ 580 and above: Maximum financing
â€¢ 500-579: Maximum LTV 90.00%
â€¢ 499 and below: Not eligible for FHA insured financing
A transaction where one borrower has only â€œnontraditional creditâ€ and the other has a decision credit score of less than 500 would also be ineligible.â€
borrowers who do not meet the bankâ€™s minimum credit requirements (often a FICO score of 620 or higher) may be denied a loan even though they technically meet the FHA minimum credit score. Borrowers who have concerns about their credit should contact the FHA to ask for a referral to a housing counselor who can offer advice on how to improve credit scores.
Myke Triebold 850-305-6256 MykeSaysSold@aol.com www.DestinHomeRealty.com