The 203K loan parallels the approval guidelines of the FHA 203K purchase/refinance mortgage. The difference between the 203K and 203B programs is the additional money for renovation/improvement. If you meet the following guidelines, you may possibly qualify for an FHA 203(k) mortgage loan.
FHA AGE REQUIREMENT
You might be surprised to know that the FHA does not have a minimum age requirement; however, the borrower must be old enough to meet the age requirement that a mortgage note can be legally enforced in the state, or other jurisdiction, where the home is located. There is no maximum age requirement.
SOCIAL SECURITY NUMBER REQUIREMENT
All applicants are required to have a valid social security number.
FHA LOAN CITIZENSHIP REQUIREMENT
In addition to US citizens, lawful permanent resident aliens, and non-permanent resident aliens are eligible for a 203K loan. Permanent resident aliens are required to provide evidence of their permanent residency, and state their residency status on the mortgage application. Non-permanent resident aliens must state that the home will be the principal residence, have a valid social security number, and are eligible to work in the United States, confirmed by the Employment Authorization Document (EAD) issued by the USCIS. Non-U.S. citizens without lawful residency in the U.S. are not eligible for FHA mortgages.
Credit score for an FHA loan
The FHA is very generous with the minimum credit score for an FHA home loan. The FHA will permit a credit score as low as 580 with the minimum down payment. A score of 500 - 579 may be acceptable with a 10% down payment.
FHA LOAN EMPLOYMENT REQUIREMENTS
The FHA requires lenders to verify the applicant's most recent two years of employment and income. W-2's are typically used to verify employment; however, lenders may also use verification forms that are completed by the applicant's employer(s).
The Mortgagee must obtain one of the following to verify current employment:
• the most recent pay stubs covering a minimum of 30 consecutive Days (if paid weekly or bi-weekly, pay stubs must cover a minimum of 28 consecutive Days) that show the Borrower’s year-to-date earnings, and a written Verification of Employment (VOE) covering two years; or
• direct verification by a third party verification covering two years, subject to the following requirements:
- the Borrower has authorized the Mortgagee to verify income and employment; and
- the date of the data contained in the completed verification conforms with FHA requirements in Maximum Age of Mortgage Documents
- evidence supporting enrollment in school or the military during the most recent two full years
Maximum Age of Mortgage Documents.
Re-verification of employment must be completed within 10 Days prior to the date of the Note (settlement). Verbal or electronic re-verification of employment is acceptable. Electronic re-verification employment
FHA delinquent federal debt
Borrower(s) are ineligible for an FHA-insured mortgage until the borrower/applicant resolves the delinquent federal debt with the creditor agency.
If the creditor agency confirms that the debt is valid and in delinquent status as defined by the Debt Collection Improvement Act, then the Borrower is ineligible for an FHA - insured Mortgage until the Borrower resolves the debt with the creditor agency
SOURCE:
Handbook 4000.1 - page 155
DEBT TO INCOME
The monthly (gross) income and monthly credit obligations must be within acceptable percentages. The monthly mortgagee payment can range from 31% of the monthly income to 40%.
The monthly mortgage payment (including real estate taxes, homeowners insurance, monthly mortgage insurance, etc) combined with the monthly credit obligations can range from 43% to 50%.
Read more about FHA debt to income ratios at -
http://www.anytimeestimate.com/FHA/debt-to-income-ratio.htm
