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FHA Loan Requirements, Handbook Kick in Next Week

Wednesday, September 9, 2015

The changes to FHA loan qualification criteria, originally scheduled for implementation in June, will instead be implemented on the 15th of this month.  The new 800 plus page FHA Single Family Housing Policy Handbook covers a variety of changes, small and large, to how borrower characteristics are to be measured and documented.  Some changes loosen requirements or ease documentation while others do the opposite.

Among the most contentious changes is the way some debt, especially deferred student loan debt, must be handled.  Under existing rules, student loan payments which are deferred for a year or more beyond closing do not have to be included in the calculation of debt-to-income (DTI) ratios.  The new regulations require that, for all deferred debt, the lender must obtain written documentation of the deferral from the creditor along with evidence of the outstanding balance and terms of the deferral.  The calculation of monthly obligation will be the actual monthly payment or 5 percent of the outstanding balance, 2 percent in the case of a student loan.

 

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