New 2015 FHA Guideline Changes

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New 2015 FHA guideline changes take affect September 14, 2015.  Most changes are constricting. We’re going to highlight some of these changes that California home buyers, Realtors and the general public need to know.

Deferred student loan debt is now going to be added as a monthly obligation even though it’s in deferment.  The lender will do a calculation and add the payment into the borrowers debt to income ratios.  This is a big change in that many students are being saddled with mountains of student loan debt.  This new guideline may change the way we look at student loans and how they are applied for.

Non borrowing spouses (a spouse not going on the loan or title to the property) for purchases will now be asked for social security number verification and a credit report will be pulled so that their debts will be added to their spouses debts.

Borrowers with delinquent federal tax debt will not be able to get FHA financing until they are in a valid repayment plan.  Typically documenting three monthly payments made on time will be enough for an FHA loan application to move forward.  The tax lien will remain in place as a lien until the agreed amount is paid off.  Simply ignoring the lien will ensure a loan denial.

Co-signors on notes, if parents buy a vehicle for their child and their child makes all the payments, if the child didn’t sign the purchase contract and didn’t sign loan papers, the debt will now be counted against the parents even if they have documentation (records) that their child made the payments.  So now, add the child to the contract and loan so that the obligation can’t be counted against you.

Gift of funds: Cousins can no longer be used as sources for cash gifts that go toward buying a home.  However in-laws are now included whereas before they weren’t.  Step relatives ie..step father, and foster parents are allowable gift fund sources.

Major delinquencies remain the same, bankruptcies have a wait period of two years, foreclosures 3 years, and short sale have no wait period as long as all mortgage payments were made on time for the 12 months preceding the short sale, same goes for all other consumer debt.

Revolving credit that requires a full payoff each month: If a payment isn’t on the credit report 5% of the outstanding balance will apply.  This may affect borrowers negatively who have a business credit card and their employer pays it.  Borrowers can supply 12 most recent credit card statements to show that it was paid in full each month.  Before the lender didn’t count this debt as a monthly payment as long as the credit report showed current.

Part time income: Must now be uninterrupted for the past 2 years to consider as income.

Earnest money deposit on a home purchase: If this amount exceeds 1% of the sales price, it will need to be documented that it came from borrowers funds and have to make sense.

There are many more new 2015 FHA guideline changes, the above are just some of the more common lenders and California home buyers will encounter.

If you have any other questions regarding these new FHA rules, feel free to contact me I’m here to help!

Best,

Kevin Walton

Certified Mortgage Advisor, Best Capital Funding

800-506-0632 ext.0

www.affordableloansbykevin.com

www.californiarealestateloanshop.com

 

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