Christopher Austin releases report explaining FHA loan rejections
–In a recent 2015 home buying report, Paso Robles home loans expert Christopher Austin explains the three common reasons why home buyers are denied an FHA loan. This timely report is released after similar surveys of more than 100 mortgage lenders revealed that excessive debt is the leading loan rejection reason, as college graduate Millennials are trying to enter the home buying market with astronomic student loan debts.
Christopher Austin brings 15+ years of experience in helping credit strapped homeowners in the greater San Luis Obispo county find home loans for Paso Robles residents need to make their dreams of home ownership a reality. His comprehensive report details the common pitfalls borrowers face when trying to secure an FHA loan. He assures readers that his lending team is able to work with most credit situations and loan to prospective home buyers when they are rejected by other banks and private lenders.
The three common FHA rejection reasons are:
The credit score is too low
With home loans, the borrower’s credit score plays an important factor in not only getting approved but also in the interest rate. For FHA loans borrowers need at least a 500 credit score to even be eligible for the program. If you hail with a 580 credit score, 80 points above the threshold, this does not guarantee immediate acceptance. The FHA loan system is separated into two tiers: tier 1 and tier 2. A credit score of 500-579, lands you in tier 1, but a credit score more than 580 is tier 2 status with a low 3.5% down payment option. Keep in mind these are the baselines. The report warns that private lenders are allowed to impose their own credit standards and often have a much higher threshold than the FHA prescribed 500 minimum.
The credit load is too much
This is often referred to as the debt to income ratio. FHA requirements state that a homebuyer must have a debt to income ratio of no more than 43% to be eligible for an FHA loan. There is some flexibility in this area as well and the Home Loans Paso Robles’ home buying report outlines that lenders may restrict the debt to income ratio lower, closer to 30%. Some lenders may be more amenable and can be willing to accept debt to income ratios higher than 43%, if the prospective borrower is well qualified in other areas or can bring a higher down payment to closing.
Christopher Austin recommends contacting his office if you have further questions regarding the home buying or the pre-approval process. His expert team of home loans Paso Robles specialists will evaluate your personal situation and see if they can find a loan that works for you. His firm is a member of 6th largest government lending firm, as reported in the Paso Robles Daily News.