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FHA Loan

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Anonymous
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FHA Loan

It's been awhile since I've been on here.  I had to get a new screen name and all.  My last post was in 2009 when I bought my first home.  This site help me fix my credit in about 6 months and made my able to buy my first home.  

 

Anyway, we have since sold that home and are in the process of buying a new home in a new state.  We were approved for a FHA loan.  They asked for a million documents just to do preapproval.  They even call and did employment verification for preapproval.  Is that normal?  Now we are in underwritting and I'm getting nervous.  During preapproval I was able to get my 3 collect paid and deleted all within 3 weeks.  

 

Now my concern is student loans.  I like to deal with hard facts so I read the FHA guidelines.  Here is the paragraph talking about credit worthyness:

 

(1) Satisfactory CreditThe underwriter may consider a Borrower to have an acceptable payment history if the Borrower has made all housing and installment debt payments on time for the previous 12 months and has no more than two 30-Day late Mortgage Payments or installment payments in the previous 24 months.
 
The underwriter may approve the Borrower with an acceptable payment history if the Borrower has no major derogatory credit on revolving accounts in the previous 12 months.Major derogatory credit on revolving accounts must include any payments made more than 90 Days after the due date, or three or more payments more than 60 Days after the due date.

 

My question is about "Installment Loans".   From the definition below, FHA does't count Student loans as "Installment Loans".  How would you guys interpret that definition?

 

 

Installment Loans
Installment Loans (excluding Student Loans) refer to loans, not secured by real estate, that

require the periodic payment of principal and interest. A loan secured by an interest in a
timeshare must be considered an Installment Loan.

 

Student Loan
Student Loan refers to liabilities incurred for educational purposes.

 

I'm not concerned about different overlays that some lenders may add.  These paragraphs are directly from the latest FHA/HUD guidelines.  I would interprete this to mean that late payments on Student loads doesn't matter in FHA because they aren't counted as "Installment Loans".  

Message 1 of 17
16 REPLIES 16
Anonymous
Not applicable

Re: FHA Loan

I would agree with your interpretation it is not counted. But they do look at it, if you have any. So it's not a 100% non factor. But strictly for qualification purposes I would agree...I sure any of the myfico members that are Loan officers will chime in.

In my case my LO wanted to see if I could get rid of them to get me a better % rate...but DW and I qualifed for the FHA maximum in Houston (Galveston Area). You probably are aware that if you arent paying or they are in default then they use a 1% minimum to factor for DTI if no payment plan is in place. In some cases that makes sense as my pay would have been $400+ instead of 1% of 35K.

 

Message 2 of 17
Anonymous
Not applicable

Re: FHA Loan

They used 1% of my loans balance to calculate payment.   I'm hoping a Loan officer responds.  I'm just curious about this. I was approved by the AUS.  

 

My loan is now in underwriting.  

Message 3 of 17
donkort
Valued Contributor

Re: FHA Loan

Student loans are installment loans.  Default carries a higher penalty than default on a "regular" loan.

 

Are you current in your student loans?

 

I understand you want somebody more in the know to chime in.

FICO 8: EQ 810; TU 816; EX 822 as of 7/5/2022
Message 4 of 17
Anonymous
Not applicable

Re: FHA Loan

None of my school loans are in default.  I did have some lates.  My loan processor told me don't worry about it.  Should I trust her.  She said it's has already been approved through AUS.  Now it is in underwriting.  I've actually gotten one more collection removed since Friday, 3-20-20.  She told me to just be patient.  

Message 5 of 17
VALoanMaster
Valued Contributor

Re: FHA Loan

As long as you have an AUS approval, you should be fine as long as you don't have over $1,000 in disputed accounts which would require the underwriter to down grade your file to a manual underwrite.

 

It's a little odd that they are fully underwriting your file for a pre-approval. I only do that with files that are iffy or if the client wants the peace of mind.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 6 of 17
Anonymous
Not applicable

Re: FHA Loan

Maybe I missed something somewhere but I am passed pre-approval.  I am 9 days from closing.  We ran into a few issues.  One was I did have a disputed item on my report.  For FHA, you can't have any disputed collections over $1000.  I paid it and got it deleted in 3 days.  I slammed the company with emails and begged and I get an email back from the CEO saying that they will delete the collection.  The next day it was deleted.  Funny how fast they move when they want to.

 

I am a basic W-2 wage earner and I'm not relying on any commisions or OT.  

Message 7 of 17
VALoanMaster
Valued Contributor

Re: FHA Loan


@Anonymous wrote:

Maybe I missed something somewhere but I am passed pre-approval.  I am 9 days from closing.  We ran into a few issues.  One was I did have a disputed item on my report.  For FHA, you can't have any disputed collections over $1000.  I paid it and got it deleted in 3 days.  I slammed the company with emails and begged and I get an email back from the CEO saying that they will delete the collection.  The next day it was deleted.  Funny how fast they move when they want to.

 

I am a basic W-2 wage earner and I'm not relying on any commisions or OT.  


Oh sorry, I misunderstood the time line.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 8 of 17
Anonymous
Not applicable

Re: FHA Loan

I will also add that I just got off the phone with my loan people.  This current market is causing havic on my rate.  The amount I would have to pay to get 3.375% right now is $8900.  I'm going to see what happens in the next few days.  

Message 9 of 17
VALoanMaster
Valued Contributor

Re: FHA Loan


@Anonymous wrote:

I will also add that I just got off the phone with my loan people.  This current market is causing havic on my rate.  The amount I would have to pay to get 3.375% right now is $8900.  I'm going to see what happens in the next few days.  



What is your current score? 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 10 of 17
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