FHA Compensating Factors
Compensating Factors for FHA Home Loans
When your payment or combined monthly debt payments is higher than the limits prescribe by FHA, the FHA mortgage may still be approved with FHA compensating factors. Here are several FHA compensating factors to support borderline loan applications:
Energy efficient dwelling
Less than 10% increase from old rent/house payment to the new housing expense
Your excellent savings ability (as shown by savings accounts, IRA's, etc.)
3 or months cash reserves (house payments after closing) that are not part of a gift
Limited use of credit
Borrower has potential for increased earnings
Borrower has income that cannot be used as qualifying income
Larger than minimum down payment
Please understand that good credit, steady income and residual income are not compensating factors but are certainly part of the overall credit evaluation.
I have included a page on how to calculate your qualification ratios.
I have included a page on documentation requirements.
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