Texas FHA Mortgage Lenders Guidelines

FHA Mortgage Lenders provide the most popular FHA mortgage loan program in the United States.

Texas Mortgage Lenders Loan Programs Include:

• Bad Credit Texas Mortgage Lenders
• FHA Texas Mortgage Lenders
• Self Employed Mortgage Lenders
• Stated Income Texas Mortgage Lenders
• VA Texas Mortgage Lenders
• Texas FHA Mortgage Lenders
• Stated Income Texas Mortgage Lenders

How can FHA help me Qualify for a Texas Mortgage?

FHA insured mortgages offer many benefits and protections that only come with FHA:

FHA Mortgage Loans Are Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

FHA Allows You To Have Less than Perfect Credit: You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA Mortgage than a conventional loan.

FHA Has A Lower Down Payment: FHA Mortgage s have a low 3.5% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don’t allow this.

FHA Costs Less: FHA Mortgage s have competitive interest rates because the Federal government insures the loans. Always compare an FHA Mortgage with other loan types.

FHA Helps You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help keep you in your home and avoid foreclosure.

FHA HUD does not provide direct financing nor does it set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. In order to initiate the loan application process, please contact an FHA approved lender.

An FHA insured mortgage may be used to purchase or refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation.)

Under the new HUDs  FHA mortgage handbook, the Handbook which is the most recent Texas FHA Mortgage Guidelines, FHA mortgage lenders benchmark is 31% of the income toward the housing and 43% for the housing plus all other payments on the credit report. FHA will permit FHA mortgage Applicants with credit scores over of 620 FICO a maximum of 56.9% Debt To Income Ratio’s front end debt to income ratios, which is called the housing ratios, and the maximum debt to income ratio is 56.9% Debt To Income Ratio’s on the back end debt to income ratio.

First time Texas mortgage applicants, as well as mortgage applicants with prior bad credit, a prior bankruptcy, a prior foreclosure, a prior deed in lieu, and a prior short sale, can qualify for FHA mortgage loans. There are mandatory waiting periods after bankruptcy and foreclosure to qualify for FHA mortgage loans.

Qualifying For FHA mortgage loans After Bankruptcy And Foreclosure
There are a minimum waiting period to qualify for FHA mortgage loans per FHA Mortgage Guidelines, after a foreclosure or bankruptcy, deed in lieu of foreclosure, and short sale. For standard FHA mortgage loan programs, there is a mandatory 12 month waiting period after a chapter 13 bankruptcy. There is a mandatory 3 year waiting period after a foreclosure, to qualify for the traditional FHA Mortgage program. The waiting period clock starts from the recorded date of the foreclosure that is reflected on public records and not the date where the keys were surrendered to the lender or the date of the sheriff’s sale. The three year waiting period after a short sale starts on the date of the short sale which is reflected on the HUD-1 Settlement Statement date. Those who have lost a job through involuntary termination and/or a company shut down and due to this had to file bankruptcy or had to go through a foreclosure, deed in lieu of foreclosure, or short sale can qualify for the new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program in just one year after the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, waiving the traditional waiting period.

Texas FHA Mortgage Guidelines On Collection Accounts
You can qualify for a FHA Mortgage FHA Mortgage with prior bad credit. You can qualify for a FHA Mortgage FHA Mortgage with unpaid collection accounts, charge-offs, and even judgments. FHA does not require you to pay off your old collection accounts in order for you to get a FHA Mortgage FHA Mortgage approval and close on your mortgage loan. There are many mortgage lenders that have mortgage lender overlays which are a set of the lenders own guidelines that is on top of FHA minimum mortgage lending guidelines and most do require that unpaid collections be paid off prior to closing because they are afraid of the collection agency pursuing judgment proceedings. Gustan Cho represents mortgage lenders with no lender overlays and just goes off the minimum FHA Mortgage Guidelines and the automated approval. If FHA says no collections need to be paid off, no collection accounts need to be paid off.

Texas FHA Mortgage Guidelines On Medical Collections
FHA does not count unpaid medical collection accounts. A Collection Account refers to a Borrower’s loan or debt that has been submitted to a collection agency by a creditor.  If the credit reports used in the analysis show cumulative outstanding collection account balances of $2,000 or greater, FHA will allow medical collections are exempt and you can have a high balance of unpaid medical collection accounts. With non-medical collection accounts, you do not have to pay off any unpaid collection balance, however, if the total of unpaid collection balance is greater than $1,000, FHA mortgage lenders  will count 5% of the unpaid collection balance as a monthly debt obligation and will count it towards calculating your debt to income ratios even though you do not pay anything. This can become a problem for FHA mortgage applicants that have unpaid collection balances.. For example, if you have a $30,000 unpaid total collection balance, 5% of the $30,000, or $1,500, will be counted as a monthly debt payment obligation and will be used to calculate your debt to income ratio. This can be a deal killer for a borrower with a lot of monthly obligations and can be a big problem have higher debt to income ratios. FHA does allow for you to enter into a written payment agreement with the creditor and whatever you agree to, the monthly payment that will be used by the FHA mortgage lenders as your monthly debt. For example, on the $30,000 unpaid credit balance, if you and the creditor agreed on a monthly payment of $300.00 per month, then the $300.00 per month will be used as your monthly debt payment on that collection account. FHA lenders have no payment seasoning requirement with this rule.

What are the maximum qualifying ratio requirements? 

FHA Maximum qualifying ratios for manually underwritten loans are determined according to the lowest minimum decision credit score and compensating factors. 

• Lowest Minimum Decision Credit Score 500-579 or No Credit Score:  31/43 
• Lowest Minimum Decision Credit Score 580 and above: 31/43 2. 37/47  – Requires 1 of the following Compensating Factors:
  • Verified/documented cash reserves equal to or exceeding 3 (1-2 units) or 6 (3-4 units) total monthly mortgage payments. 
  • Minimal Increase in Housing Payment  

• Residual income  

3. 40/40 – No Discretionary Debt:
• The borrower’s housing payment is the only open account with an outstanding balance not paid off monthly; and
• The credit report shows established credit lines in the borrower’s name open for at least 6 months; and 
• The borrower can document these accounts have been paid off in full monthly for at least the past 6 months.  

4. 40/50 – Requires 2 of the following Compensating Factors:
• Verified/documented cash reserves equal to or exceeding 3 (1-2 units) or 6 (3-4 units) total monthly mortgage payments. 
• Minimal Increase in Housing Payment  

• Significant Additional Income (Overtime, Bonuses, Part-Time or Seasonal Employment) Not Reflected in Effective Income   

• Residual income   

Texas FHA Mortgage Guidelines On High Debt To Income Ratios
Conventional mortgage loan FHA mortgage Applicants who have high debt to income ratios can turn to FHA mortgage loans to qualify if they do not meet conventional debt to income guidelines. Maximum debt to income ratios for conventional loans is capped at 45% Debt To Income Ratios. FHA is much more generous with debt to income ratios. FHA caps their back-end debt to income ratios at 56.9%. FHA mortgage loans have a front-end debt to income ratio cap of 46.9% Debt To Income Ratio’s. FHA mortgage loans is a phenomenal mortgage loan program for first time mortgage applicants, mortgage applicants with bad credit and low credit scores, self-employed buyers, and mortgage applicants who have high debt to income ratios.

Texas Non-Occupant Co-FHA mortgage Applicants
Another advantage of FHA mortgage loans is that if the main borrower has little or no income documentation, FHA lenders will allow the borrower to add a non-occupant co-borrower for income qualification purposes. The non-occupant co-borrower needs to be related to the main borrower by marriage, blood, or law. Special exceptions may be made if the FHA mortgage lender can verifity the non-occupant co-borrower has been close friends to the main borrower for at least 5 or more years.

Texas Gift funds And Sellers Concessions
FHA allows the home buyer to get 100% gift funds to be used for the down payment and/or closing costs. Gift funds needs to come from a relative of the home buyer and a gift letter needs to be signed by the donor stating that the funds is only a gift and is not a loan and does not have to be paid back to the donor.

FHA mortgage lenders will allow up to a 6% sellers concessions towards a mortgage applicants closing costs. However, the closing costs cannot be wasted so make sure you do not get excess sellers concessions where you cannot apply it to your closing cost.

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