Can I qualify for an FHA?

Question

Tou Vang · Answer

I agree with @Frank R.

To start off the typical property value that you can purchase with you income is 3X the annual amount. For example if you make $24K/yr then it's best if you purchase a property for $24K*3= $72K property value. Unless you have a decent size of down payment greater than 3.5% (Basic FHA down). The debt from your mortgage doesn't consumer all of your income unless you can find a duplex @ this price.

This is why majority of the beginner RE investor start with Wholesaling to generate a good income before getting into buy and hold.

If you're still interested in the buy and hold strategy then I suggest getting with a mortgage lender to know the specific loan amount they will give you.

Good luck.

Franklin Romine · Answer

@Chase Hancockyour income is low.  What is your game plan to increase the income?  I wouldn't jump into a house until you solve the income problem.Franklin

Justin S. · Answer

FNMA selling guide has nothing to do with FHA, you need to pull up the HUD handbook

Justin S. · Answer

I don't know where everyone is getting these debt ratios from, but they aren't true. Max dti for automated approval through GUS is 47% housing ratio and a 57% back end ratio (and this is pretty much everyone, lenders don't manually underwrite unless there is an automated approval issue) - even then 31% and 43% are just placeholders, HUD allows 37% and 47% by meeting residual income requirements and no further compensating factors on R/E loans, and you can exceed 37% and 47% (most lenders will cap back end at 50%, but you can go to 57%) with strong compensating factors, such as assets.  Hope this helps.

Jeff Brower · Answer

The ratio for FHA is 31/43%. Those are for front end and back end DTI ratios. The home payment alone must not exceed 31% of your gross income and your total monthly debts (including credit cards, student loans, etc) must not exceed 43% of the home payment. Lenders may bend slightly on these ratios but only with exemplary credit.

@Brandon Battle I thought they recently changed the rules on fha where you could include 75% of rents even if you don't have a 2 year schedule E history. They have a spreadsheet posted on the fannie site that shows you how to calculate the income and include it in your qualifying income. I may be wrong on this but I thought it just recently changed in September of 2015. Someone please let me know if I am incorrect on this. A Form 1037 (rent based on leases) or 1025 (rent appraisal) are the forms I am thinking of.

https://www.fanniemae.com/content/guide/selling/b3...

Nathan Wandell · Answer

Brandon, I've spoken with some lenders that WILL include up to 75% of that potential rent in your debt to income ratio as long as you have a signed rental agreement with a security deposit BEFORE closing on the house.  Shop around.  It may be possible. I don't know the California market, but I would assume that it would be difficult to find a multiplex that would keep you under a 35-40% debt to income ratio in the CA market.  Call some lenders in your area.  Call several. Different lenders have different programs.  Best wishes!

Nate Burnett · Answer

Well first thing,  are all your tips reported correctly/taxes paid? If you have unreported income that helps the $2000/month it won't help you.

Do you know your DTI? I believe FHA wants a mortgage to be about 30%, and credit score has to be above 600