2015 saw significant changes to FHA Ohio guidelines that could impact the typical Ohio FHA borrower, positively and negatively. Here is a brief overview of some of the changes that I see on a frequent basis:
Gift Funds
Gift donors are now required to provide a copy of their bank statement, as well as document and explain any large deposits to their account.
Large Deposits
Any deposits in your bank account that exceed 1% of the purchase price of the home or appraised value, whichever is lesser, must be documented.
Part-Time Employment Income
Two years of uninterrupted part-time income is required.
Self-Employed Income (declining)
Income from self employment that has declined by more than 20% over the previous 2+ years is not acceptable unless extenuating circumstances can be documented, the self employment income has been stable or increasing for at least 12 months, and the borrower qualifies using the reduced income
Frequent Job Changes
If you have changed jobs more than 3 times in the prior 12 months, or have changed lines of work then FHA will require:
- transcripts of training and education demonstrating qualification for the new position, or
- employment documentation evidencing continual increases in income and/or benefits.
Deferred Loans
Deferred loans (including Student Loans) must be included in your qualifying ratios (debt ratios). The lender will use the actual monthly payment, or if the actual monthly payment is unknown, 5% of the outstanding balance or if it is a student loan, 2% of the outstanding balance.
Installment Debts with less than 10 payments remaining
Installment debts with less than 10 payments remaining may be excluded only if
- they have cumulative payments of less than or equal to 5% of the borrower’s gross monthly income, and
- the borrower may not pay the debts down to achieve this percentage.
Multiple FHA Ohio loans to the same borrower
Previously, Ohio FHA’s guideline was vague for one of the exceptions allowing a person to obtain a 2nd FHA mortgage. The new guideline states that a borrower may obtain a second FHA loan for a new principal residence when relocating for employment and the current residence is more than 100 miles from the new residence area.
FHA Streamline Refinance Net Tangible Benefit
FHA now allows a borrower to meet the Net Tangible Benefit requirement if they are reducing the term on their mortgage (for instance going from a 30 year to a new 15 year mortgage) as long as the new interest rate does not exceed the current rate and the monthly payment does not increase by more than $50.
Please remember, the changes above are not the entirety of the changes that were made.
If you’d like to discuss your options for obtaining an FHA mortgage in Ohio you can call me, email me, or complete the Ohio FHA Rate Quote Request.
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