FHA Loan went to Manual Underwriting

[Anonymous]

Any experiences would be appreciated, we applied for an FHA loan because of past credit issues.  My husband was in school until May of 2009 and our income went from 53K per year to 146K per year.  Our most recent late was in August of 2009.  (the month he became employed) We have met the requirements for debt to income ratio but I am nervous because it went to Manual Underwriting.  Does that mean that's is pretty much a denial of the loan

My Scores TR 645 Exp 648 Equ 638

Husbands TR 652 Exp 658 Equ 642

[Lel]

Short answer is no, going to manual underwriting does not mean a denial at all.  Many people have their files sent to manual underwriting and get approved in the end.

However, that recent late is not going to sit well.  FHA underwriters usually require a clean credit history for at least 12 months, and often 24 months.  Also, since your family income has been $146,000 for just a short period of time, this may not be enough earnings history to satisfy the lender.

Are those credit scores the ones pulled by your loan officer?

[Anonymous]

The scores were pulled through myfico.com.  I know there are many credit models that are used for various things.  My husband was in school for 4 years and we have provided a copy of his transcipts to show why there was no past income.  I have been employed for 7 years with the same company.  We have previously owned a home with an FHA mortgage, had lower scores and less income and for some reason that process went a lot smoother (probably because I was young and naive).

[Lel]

The criteria for loan qualifying have tighted up considerably ever since the credit markets started crumbling.  Credit score have to be higher, recent credit histories have to be clean, and income has to be steady and verifiable.

The fact that your husband was in school isn't going to matter for qualifying.  But since his schooling has led to a tremendous increase in income, then this will work in your favor.  However, lenders typically like to see a steady income stream for at least a couple years to make sure that a borrower will be an appropriate long-term lending risk for them.

Your Experian scores must have come from a different site from here.  Users of this website have not been able to pull Experian scores for over a year.  If you pulled all three credit scores at the same site, then it could not have been from myfico.com.

[Anonymous]

You are correct about Experian.  The Transunion and Equifax came from Myfico and Experian came directly from the Experian site.  I should have clarified that.  I was hoping that with the increase in income that would work in our favor. 

[Anonymous]

They will probably average income to determine DTI since the income has not been for 2 years.

As far as the late goes, was there a long pattern of lates up to that point or was the Aug 09 late a fluke or mistake.  If you had a pretty regular history up to that point of lates, they are probably going to make you wait until 12 months.  If it was just the one in the last 12 months, then you will probably be OK.  If it is somewhere inbetween then it will be more up in the air.