Updated HUD Mortgage Guidelines On Home Purchase Loans

In this article, we will discuss and cover updated HUD mortgage guidelines on home purchase FHA loans. The economy is on a fast-paced economic recovery after the coronavirus outbreak in February 2020. The housing market is booming like never before. Home prices are skyrocketing and both the FHFA and HUD has increased loan limits on Conforming and FHA Loans for the fifth consecutive year in a row.

FHA Loans Remain The Most Popular Loan Program in The Nation

FHA loans still remain as the most popular loan program for first time homebuyers, and those with less than perfect credit. There is no other government-backed mortgage program like FHA loans that allow borrowers with credit scores as low as 500 FICO to qualify for a home mortgage. However, HUD, the parent of FHA, wants to make sure that borrowers have the ability to repay their new mortgages. HUD makes qualify for an FHA loan easy for those with little to no credit, bad credit, lower credit scores, and borrowers who need a second chance in life. It is easier to get an approve/eligible per automated underwriting system (AUS) on FHA loans than any other loan program. 

The ROLE Of The Federal Housing Administration

The U.S. Housing and Urban Development (HUD) is the parent of the Federal Housing Administration (FHA). The role of HUD is to promote homeownership to hard-working Americans with a 3.5% down payment and at least a 580 credit score. Homebuyers can qualify for an FHA loan with under a 580 credit score and down to a 500 FICO with a 10% down payment. Any borrowers with under a 580 credit score require a 10% versus a 3.5% down payment. FHA is the federal agency that administers FHA loans. FHA is not a lender. It is a federal agency under HUD that insures and partially guarantees lenders in the event the FHA loans originated and funded default and goes into foreclosure. The role of FHA is to insure the loss sustained by lenders with the loan that defaulted. In order for FHA to insure the lender, the lender needs to follow all aspect of HUD mortgage agency guidelines. Updated HUD Mortgage Guidelines can change without notice. It is up to the individual lender to abide and follow Updated HUD Mortgage Guidelines

HUD Agency Guidelines Versus Lender Overlays

All lenders need to abide by the minimum agency HUD Mortgage Guidelines. HUD can change existing FHA Guidelines anytime without notice. Once new HUD Guidelines are announced, it is up to the lender to implement it on new FHA case numbers. This is why it is very important for all lenders and loan officers to keep current on HUD Guidelines. All mortgage companies need to meet the minimum agency Updated HUD Mortgage Guidelines. However, lenders can have their own lender overlays. Lender overlays are additional lending guidelines that are above and beyond the minimum agency HUD Guidelines. Lenders can change their lender overlays anytime without notice. They do not have to notify HUD. It is perfectly legal to have lender overlays. This is why not all lenders have the same FHA mortgage guidelines. Most lenders will have lender overlays on FHA loans. Non-QM Mortgage Lenders is one of the very few national lenders with no lender overlays on government and conventional loans.

Latest Updated HUD Guidelines On FHA Loans

 

The latest HUD Mortgage Guidelines is the HUD 4000.1 FHA Handbook. The HUD 4000.1 FHA Handbook will list the latest Updated HUD Mortgage Guidelines. HUD can change the agency guidelines on a particular requirement anytime and can do it as many times as needed. HUD will release any changes to its agency mortgage guidelines on FHA loans. Lenders who miss the changes or new Updated HUD Mortgage Guidelines on new case numbers, their FHA loan will not get insured and/or saleable on the secondary market. It is the responsibility of private lenders to make sure they keep current with the latest Updated HUD Mortgage Guidelines.

Updated HUD Mortgage Guidelines On The Automated Underwriting System

All borrower’s files will go through the automated underwriting system. The AUS will analyze the borrower’s mortgage loan application and credit report and render an automated decision. The AUS is a sophisticated automated system that has all of the newest and latest updated HUD mortgage guidelines. If the findings render an approve/eligible, it means the borrower meets all the updated HUD mortgage guidelines and should get approved for an FHA loan with a lender with no overlays. However, lenders can add their own lender overlays on FHA loans. The AUS has the Single-Family Housing Policy Handbook 4000.1 programed in the system. Non-QM Mortgage Lenders has no lender overlays on FHA loans. We just go off the automated findings from the automated underwriting system (AUS).

Minimum Agency HUD Mortgage Guidelines

The HUD 4000.1 FHA Handbook is almost 1,000 pages. We will cover the basic common lending guidelines. If you have any questions about certain FHA Guidelines, please contact us at Non-QM Mortgage Lenders at gcho@gustancho.com or call and/or text us at 800-900-8569.

Updated HUD Mortgage Guidelines On FHA Loans

 

Here are the common HUD Guidelines on FHA loans:

• Borrowers can qualify for a 3.5% down payment home purchase FHA Loan with a 580 credit score
• Borrowers under 580 and down to 500 FICO can qualify with 10% down payment
• Gifted funds are allowed for the down payment and closing costs
• 2 year waiting period after Chapter 7 bankruptcy discharged date
• 3 year waiting period after foreclosure, deed in lieu of foreclosure, short sale
• Borrowers can qualify for FHA loans during Chapter 13 bankruptcy repayment plan with Trustee Approval via manual underwriting
• Chapter 13 bankruptcy does not have to be discharged
• There is no waiting period after Chapter 13 discharged date
• Any Chapter 13 bankruptcy discharge that has not been seasoned two years need to be manually underwritten
• Manual underwriting need timely payments for the past 24 months
• One or two late payments in the past 24 months is not a deal killer on manual underwrites
• Outstanding collections and charged-off accounts do not have to be paid to qualify for FHA loans

FHA Lenders With No Lender Overlays

There are over 1,000 pages on the HUD 4000.1 FHA Handbook. Borrowers who are looking at getting qualified with a mortgage company licensed in multiple states with no lender overlays, please contact us at Non-QM Mortgage Lenders at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Non-QM Mortgage Lenders has a national reputation of being a one-stop mortgage shop due to the dozens of non-QM and alternative financing loan programs we offer. We feel it is important to have every mortgage program available in the marketplace during the housing boom so nobody misses out in qualifying for a home mortgage.  The team at Non-QM Mortgage Lenders is available 7 days a week, evenings, weekends, and holidays.