| FHA home loans are government loans with lenient | | | | the top ratio number 29 (29% of their income will be |
| credit checks; however, there are some guidelines to | | | | used for their home expense). The bottom number |
| be able to receive a FHA mortgage. The person trying | | | | displays all of the person's debt, including new house |
| to qualify will need their debt to income ratio to fall | | | | payment, car payments, other loans, child support, and |
| within the FHA requirements before they are | | | | credit card payments and compares it to their income. |
| approved. FHA loans are approved by computers and | | | | The maximum for this percentage is 41. The person |
| humans allowing each loan to be looked at individually | | | | making $3400 per month that has total debt of $1400 |
| where sometimes exceptions can be made. The FHA | | | | would have a bottom number of 41. This makes the |
| guidelines are not made to create problems for | | | | debt to income ratio 29/41. Exceptions are made with |
| anyone; in fact they allow everyone to succeed. The | | | | FHA loans when it comes to debt to income when the |
| guidelines protect the borrower from getting in over | | | | person puts down more than is required by the |
| their head with a mortgage while still approving many | | | | government loan, or has enough in other assets to |
| people that may not be approved otherwise. The | | | | actually pay off the loan. |
| guidelines also make it possible for banks to feel | | | | Other FHA guidelines are that a FHA borrower must |
| confident that they will be repaid the FHA loan they | | | | hold mortgage insurance on the home, and there are |
| grant. | | | | loan maximum amounts that will depend on the county, |
| The debt to income ratio displays a person's debit and | | | | state and type of home. The borrower must also put |
| income in the form of a fraction (ratio). The top | | | | down 3.5% as of January 2009. There are not written |
| number makes a relationship between the person's | | | | in stone FHA guidelines for past employment history. |
| income and their new housing expense including | | | | It's actually in the hands of the lender to check and |
| principal, interest, taxes, insurance and any homeowner | | | | confirm employment and income for the last couple of |
| dues that may apply. The FHA guidelines show that | | | | years. Frequent job changes normally show instability, |
| the maximum percentage can be 29. A potential FHA | | | | but exceptions are made when the changes are within |
| borrower could make $3400 per month and their | | | | the same line of work with increases in pay. |
| home expenses could be $1000 per month to make | | | | |