FHA Guideline Updates 2024 (2024)

FAQs

What are the FHA changes for 2024? ›

For 2024, the FHA floor loan limit for single-family homes is $498,257. This single-home lending amount covers most areas in the United States (click here to check your area's loan limit). On the other hand, the FHA ceiling loan limit for single-family homes has been increased to $1,149,825.

To recap, FHA's maximum qualifying debt ratios for borrowers in 2024 are 31% and 43%. This means the monthly housing payments should not exceed 31% of gross monthly income, while the total debt burden should not exceed 43% of monthly income.

For those interested in applying for an FHA loan, applicants are now required to have a minimum FICO score of 580 to qualify for the low down payment advantage, which is currently at around 3.5 percent. If your credit score is below 580, however, you aren't necessarily excluded from FHA loan eligibility.

FHA Student Loan Guidelines 2024

If the actual monthly payment is zero or is less than what would be under regular amortizing payment terms, lenders must use the greater of . 5% of the outstanding loan balance or the monthly payment reported on the credit report.

• Fannie Mae: Rates Will Decline to 6.4%

The August Housing Forecast from Fannie Mae puts the average 30-year fixed rate at 6.4% by year-end, a slight decline from 6.6% in the third quarter. All told, the mortgage giant predicts mortgage rates will average 6.7% in 2024 and 6% in 2025.

Recently opened accounts or individual large deposits in excess of 50% of borrower' s total monthly effective income will require an explanation and documentation for source of funds. Deposits must be verified to be commensurate with the borrower's income and savings history.

In a May 20, 2024 update to the Single Family Housing Policy Handbook 4000.1, the FHA announced a significant increase in the processing fee that lenders can charge borrowers assuming an existing FHA-insured mortgage. The maximum allowable fee has been doubled from $900 to $1,800.

“For employees with Overtime or Bonus Income, the Mortgagee must average the income earned over the previous two years to calculate Effective Income. However, if the Overtime or Bonus Income from the current year decreases by 20 percent or more from the previous year, the Mortgagee must use the current year's income.”

With exceptions, FHA won't accept a loan applicant who has had a foreclosure within the prior 3 years. Sub-prime lenders may have a 3-year rule for their best credit grade, but the period scales down by degrees and might be only 1 year for the lowest grade.

The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.

What credit score is needed to buy a $300k house? ›

Credit Score

For a $300,000 home, you'll likely need a good credit score: 740+: Best rates and terms. 700-739: Slightly higher rates. 660-699: Higher rates, may require larger down payment.

FHA loans have more lenient qualification requirements than other loans. Borrowers must have a minimum credit score of 580 to qualify for the loan. The maximum DTI for FHA loans is 57%. However, a lender can set their own requirement.

The FHA flipping rule requires investors to hold properties for at least 90 days before selling to FHA buyers. This rule impacts property flipping plans by imposing additional scrutiny on sales within 91-180 days. Investors need to factor these timelines into their investment strategies.

Debt-to-Income Ratio Requirements

FHA guidelines call for borrowers to have a DTI ratio of 43% or less. They also indicate that a mortgage payment should not exceed 31% of a person's gross effective income. However, as with credit scores, lenders have some discretion here.

Allows you to use IBR payments on your credit report as long as it's not $0. If payment is $0 on credit report must use . 5% of the balance as a payment.

The majority of FHA borrowers choose a 30-year fixed term with a 3.5% down payment. In this case, the monthly mortgage insurance factor would be . 55% as of 2024. The one-time upfront (UPMIP) would be 1.75% – this is commonly added to the buyer's final loan amount.

The FHA self-sufficiency test is a newer guideline that determines whether a property's rental income can cover its full payment. A triplex or four-plex is not eligible for FHA financing unless its rental income potential exceeds the payment. The rule does not apply to duplexes.

Through the newly created FHA, the federal government began to insure mortgages issued by qualified lenders, providing mortgage lenders protection from default. If a borrower failed to make their payments, the FHA was required to cover the unpaid balance.