If you’re still on the fence about purchasing a home maybe this information will get you off the fence and into your very own home using an FHA loan. Here are some general guidelines to Pre-Qualify.
Things you’ll need:
• Tax Returns-Federal including all schedules
• W2s and 1099s-Last 2 years
• Pay Stub-Most recent months worth(30 days)
• Bank Statements-Last 3 months for all accounts all pages.
• If you Rent-12 months of cancelled rent checks and landlord contact information.
• Bankruptcy-Bankruptcy and discharge papers
Consistent History of Employment - 2 years minimum, preferably same company but as long as same profession you will be within guidelines.
To go with employment is; income showing you earn a fixed salary or income shows your ability to repay the loan amount.
Solid Credit Report-History that shows you have paid all your debts on time with no 30-60-90 day late payment is a must. You will need at least a 2 year credit history with 3 to 4 open lines of credit. It is possible to qualify if you have NO score using alternative credit, i.e. utility, cell phone, daycare are just a few acceptable sources. You will need to provide a 12 month history for these debts using a canceled check from your bank account.
Bankruptcy History must be 2 years out and your credit report since your bankruptcy must reflect you are in control of your finances and back on track with no late payments since your bankruptcy.
Foreclosure History must be 3 years out with a good credit standing for 3 years with a perfect credit history after foreclosure.
Debt Ratio's - calculating your debt to income ratio is not rocket science. You will be surprised at how easy it is done. You will need to figure out all your debts including auto-credit cards-personal loans-student loans etc. then figure out what your new house payment will be. Then add principal and interest your estimated property taxes and homeowner's insurance and add them all together to get your total debt ratio. Don't calculate utilities and other household expenses only your credit debts will be figured to get your total debt ratio. This figure should not go over 41% of your total gross income.
• FHA will allow up to 6% seller contributions. This means the seller is allowed to credit the buyer up to 6% of the purchase price. This could pay for most if not all of the buyer's closing costs.
• FHA will allow 96.5% Loan To Value (LTV)on a purchase
• FHA will allow 97.75% LTV on a refinance (rate & term only)
• FHA will allow 85% LTV on a refinance with cash out.
• Types of property allowed; 1 - 4 units if Owner occupies one unit - Condo - PUD's
• These are guidelines and general descriptions only; the actual process is substantially more detailed and results may vary on a case by case basis.
• Consult a lender for further assistance.