Getting an FHA Loan, Did It Just Get Harder?

Regulations and requirements for Federal Housing Administration-approved mortgages have recently been updated and changed, making it potentially harder for homebuyers with discrepancies in their credit histories. Although it will make it harder to secure a loan, the FHA is aiming to make the loan program better, which has been stressed for some time. Here is further information about FHA loans, things that lenders now have to look for when people apply for the loan, as well as obstacles you need to be aware of if you are seeking or planning to seek an FHA loan.

Homeowners typically select loans from the Federal Housing Administration, or FHA, because they have not yet saved enough money to be able to afford the five percent minimum down payment that a number of other loans require. Conventional mortgages are known to require a debt-to-income ratio of 45 percent or less; however, the FHA allows borrowers to spend up to 56 or 57 percent of their income on other obligations (credit card payments, other loans, etc.).

Most recently, the U.S. Department of Housing and Urban Development has issued letters stating that lenders must add collections accounts and judgements to an applicant’s debt-to-income ratio. This is because these things can play a factor in whether or not a homeowner will have to ability to pay off the mortgage in time or not. The FHA loans made from here on out are all required to meet these standards.

Some homeowners are now experiencing the stress and anxiety that comes along with applying for any type of loan, but it may soon become worse as a new regulation will go into effect in January 2014. The debt-to-income ratio will become 43 percent as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These adjustments are said to help strengthen the FHA loan program in general, which could potentially make it better for homeowners and homebuyers in the future..

If you are planning on seeking a loan from the FHA, consider paying off as much of your debt as you can, if you are able to, so it is easier for you to secure the loan. Even the smallest payments that will decrease your debt-to-income ratio and will be helpful in the long run. For more information regarding the new requirements for Federal Housing Administration-approved mortgages, visit here.

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