Whether current or in default, at least 31% of the borrower's monthly income must be tied to paying the mortgage debt. Other requirements come in to play that have to do with the total debt owed and any secondary financing.

Borrowers may get information from their current lender or an FHA-approved lender (found on the website for the Department of Housing and Urban Development). Each loan will be considered for underwriting after a new appraisal is performed and income and credit history is again documented and verified.

Be aware that there are many requirements for approval that, once secured, include many additional terms, such as insurance premiums and profit sharing on appreciation. If you sell or refinance within a one-year period, you must pay the FHA 100% of your profits. That percentage drops 10% each additional year, down to 50% after five years.

Keep in mind, however, that savings can still be substantial on these lower interest, fixed-rate loans, which will never readjust like subprime mortgages can every six months. Homeownership can again be the American dream, not a nightmare.

Michael Sinton
Broker/Owner

Enter your email
address below
to subscribe to
my blog!