New Lending Rules For Bad Credit Borrowers
The financial industry has sure taken a beating the last year or so, and along with the suffering have been some guideline changes. As part of the conditions to receive bailout money the lenders have to tighten a bit as far as qualification guidelines for borrowers.
The changes i am mainly talking about affect the FHA loan programs which have been life savers for people with bad credit. Before March of 2009 a borrower could get an FHA loan no matter what their credit score was. This is not the case anymore. Borrowers must have at least a 620 score to even be considered for an FHA loan these days.
Debt to income ratios and Housing ratios have not changed however which is a good thing. The ratios are that your new house payment can got up to 31% of your income and that your total debt can be as high as 43% of your income. By having these ratios stay the same it will help many people qualify as times are very tight.
Appraisal ordering has changed as well with the new guideline changes. Appraisals now must be ordered through a new agency set up by the government to ensure that favoritism and inflated values stop ruining the housing market.
The downpayment for FHA loans has changed a little bit as well. 3% used to be all that was required as a downpayment at closing to get an FHA loan. FHA has now changed this amount to 3.5% which is not a huge difference.
These changes may sound like an obstacle to owning your own home, but they are good in the sense that they will help our financial system to be a bit more stable.
The changes i am mainly talking about affect the FHA loan programs which have been life savers for people with bad credit. Before March of 2009 a borrower could get an FHA loan no matter what their credit score was. This is not the case anymore. Borrowers must have at least a 620 score to even be considered for an FHA loan these days.
Debt to income ratios and Housing ratios have not changed however which is a good thing. The ratios are that your new house payment can got up to 31% of your income and that your total debt can be as high as 43% of your income. By having these ratios stay the same it will help many people qualify as times are very tight.
Appraisal ordering has changed as well with the new guideline changes. Appraisals now must be ordered through a new agency set up by the government to ensure that favoritism and inflated values stop ruining the housing market.
The downpayment for FHA loans has changed a little bit as well. 3% used to be all that was required as a downpayment at closing to get an FHA loan. FHA has now changed this amount to 3.5% which is not a huge difference.
These changes may sound like an obstacle to owning your own home, but they are good in the sense that they will help our financial system to be a bit more stable.
About the Author:
Greg writes articles about mortgages for people with bad credit and for bad credit mortgages help