On March 14, 2019 the Federal Housing Administration (FHA) announced changes to underwriting requirements. Many in the media have predicted these changes will hurt a large number of potential homebuyers. While that may be true, the changes are being made to ensure FHA’s long-term ability to help borrowers.
A few data points that FHA provided as reasons for the tightening of underwriting requirements are:
- Cash-Out Refinances increased by 60 percent in 2018
- Debt-to-income (DTI) ratios above 50% accounted for more than 50 percent of all FHA mortgage in 2018
- Credit scores decreased to an average of 670 in 2018, the lowest average since 2008.
What are the FHA changes?
Applications submitted through FHA’s automated underwriting system will undergo greater scrutiny. Some loans that previously received an automated underwriting approval, now will require a manual underwrite. Many lenders still offer Manual Underwriting on FHA mortgages, so those borrowers that don’t receive an automated approval can still potentially get a FHA home loan.
Now, more than ever, you need to trust that that your loan officer has access to the programs that you need. If you want to discuss your options for a FHA mortgage CONTACT ME or complete the simple, no obligation Ohio FHA Rate Quote Request form
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