Refinance into FHA

For information on what FHA is, please click… What is FHA?

If you’re looking into refinancing a sub-prime, conventional or any other type of Non-FHA Insured Mortgage. You might want to take a look at getting an FHA Loan.

FHA insures many loan types to assist borrowers in getting where they want to be.

FHA Loan Requirements

  • FHA REfinanceIncluding your new mortgage payment you may not have a debt to income ratio that exceeds 43% (This means that all the payments you make towards debts may not exceed 43% of your monthly income.)
  • If you’ve had a foreclosure or bankruptcy, you need to be able to prove that you’ve been making regular payments for at least the last 2 years.
  • You must have had a steady income for at least the last 6 months.
  • If you’re a business owner you must have had steady income for at least the last 2 years.
  • FHA does not require a FICO score minimum, rather your mortgage broker will look at the overall pattern of your credit history rather than an individual issue that could have damaged your FICO score.
  • If you’re refinancing a sub-prime, conventional or any other non-FHA mortgage, seeking to refinance other debts besides your current mortgage into the FHA loan, or looking to take cash out, you do have to credit-qualify. But that’s not so hard either.
  • You must have a valid Social Security Number (SSN).
  • You must be legal resident of the United States.(U.S. citizenship is not required)
  • You must be of a legal minimum age to sign legally binding documents.
  • Visit our FHA Loan Limits page to find out what the maximum loan amounts are within your state and county.

What is Manual vs. Automated Processing?

It is standard industry practice to use Automated Underwriting Systems (AUS) to evaluate loan applications. An AUS processes key information like your credit score, your monthly income, how much you want to borrow, how much cash you’ve saved, and the value of the property you want to buy or re-finance. Based on this information, the AUS produces a report recommending approval or denial of your loan application.

Manual underwriting involves the evaluation of your information by a person called an underwriter in the lender’s office. The underwriter will apply his or her knowledge of FHA underwriting standards to your information, and make a decision to approve the loan or not.

Your lender may use either or both types of underwriting to process your loan, but there’s one important thing you need to know: you can’t be turned down for an FHA-insured loan just because an AUS report doesn’t recommend approval. If the AUS report doesn’t recommend approval, it just means that your loan has to be processed manually.