Issue: Q&A - July 10, 2016

FHA – Revolving Credit Payoff: If a revolving credit card is paid off, does FHA require this account to be closed?

Answer: FHA does not have a guideline requiring a revolving debt to be paid at closing to be closed. Social Media Post: FHA does not require a credit card account to be closed when paid off. Copyright © 2018 – Mortgage Currentcy – All Rights Reserved

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Multi Unit Cash Out Refinance – Rental Income: Can I use rental income from other units in a multi-unit property to qualify my borrower?

Answer: Veterans that own Multi-Unit properties can do a cash-out refinance and use the rents on the other units to qualify. Call me for details! Yes. 75% of the prior rents is the calculation. However an underwriter will also look at the tax returns and the NET rental income to do this calculation, so you […]

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Child Care Calculation: Does child care count in DTI and Residual income, or only residual income?

Answer:VA calculates the child-care expenses in the DTI, but Medicare, Federal Withholding & Social Security are only deducted on residual income! Child-care expenses are part of the DTI and residual income. Medicare, federal withholding and Social Security are deducted for residual income calculation. Please see the attached references that will explain the calculation and use […]

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Identity of Interest: A grandmother passed away and the granddaughter wants to buy the house from her estate. Is this an identity-of-interest situation that would limit her max LTV to 85%?

Answer: FHA will allow an exception to their Identity-of-Interest LTV restriction for Family Member transactions. Call me! While this would be an underwriter call, it is my opinion that this would be considered a family member transaction, which would create an exception to the maximum LTV. Reference: Handbook 4000.1 states the following: (A) LTV Limitations […]

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Temp to Perm Income Calculation: Can a client that has been working for 8 months through a temporary agency (doing very similar work to what he did prior to being unemployed) use the income to qualify?

Answer: If he is hired on a permanent basis at the company where he has been working as a temporary employee, he would have to work as a permanent hire for 6 months before he could be considered for a FHA mortgage. While FHA does not provide guidance on this exact scenario, your underwriter should […]

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