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FHA and overdraft protection?

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jhc7399
Valued Member

FHA and overdraft protection?

My mortgage broker has told me that too qualify for FHA you will need to show 90 days bank statements and no overdrafts in the 90 days. If you have a line of credit on your checking account (NFCU Navcheck) and use it do they consider that an overdraft?

Starting Score: 9/1/12 - EX:527 - EQ:586 - TU:547 - FICO:586
Current Score: 1/23/13 - EX:651 - EQ:679 - TU:628 - FICO:679
Goal Score: 700
Message 1 of 6
5 REPLIES 5
tooleman694
Valued Contributor

Re: FHA and overdraft protection?

You can explain your way out of them. For example lets say you have 20k in savings and opps you did a checking overdraft into savings. Its ok but needs to be explained why it happened and how it wont happen again.

 

But a line of credit. uh iv seen horror stories on here with people getting denied because it looks like you were living off credit. I think that is a tough one.

Message 2 of 6
ShanetheMortgageMan
Super Contributor

Re: FHA and overdraft protection?

It's only 60 days of bank statements, not 90 days.

 

I am not familiar with a line of credit attached to your checking account.  Do you mean that the funds in your checking account act as a secured line of credit?  i.e. you have $1,000 in checking so you can borrow against that up to $1,000?

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
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Message 3 of 6
DallasLoanGuy
Super Contributor

Re: FHA and overdraft protection?

i have only asked for 60 days.....

and i have had people successfully explain away situations like this..... 

letter of explanation: "i used my overdraft protection as a convenience is some situation"

Retired Lender
Message 4 of 6
Anonymous
Not applicable

Re: FHA and overdraft protection?

Hey Dallasloanguy

I am getting ready to go to underwriting.  I have a overdraft transfer  fee of .50 cent.  I have more than enough in my savings account, i just forgot to transfer funds over to my savings account to cover a bill that I had paid online.  The other overdraft transfer fee that I have for .50 cent came from a transaction that I did during the holidays.  I made the deposit the next day.  Will this cause me to be denied my FHA loan.

Message 5 of 6
Anonymous
Not applicable

Re: FHA and overdraft protection?

I have a credit card attached to my checking account with Chase. It has a 0 balance and funds are immediately transferred to check to cover any debit card charges that cause the account to drop into the red. The few times I've used it have been as a conveniece to avoid having to make multiple transfers from checking to savings. Use the debit card for the day as needed (Chase allows me to go up to $500 in the red) and then make one transfer from savings at the end of the day. The money goes back to the credit card the next day and never actually processes, so no fees. Saves you from a bunch of $30ish dollar "starbucks overdrafts".

 

Hope that helps explain what OP is describing.

Message 6 of 6
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