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• Most recent two years complete tax returns with all schedules.
• Most recent two years W-2's, 1099's, etc.
• Most recent pay stubs covering one month period.
• If Applicable: Self-Employed will need Three years Tax Returns and YTD Profit & Loss Statement.

Savings Information

• Most recent three months complete bank statements for any and all accounts with all pages.
• Most recent statement from retirement, 401k, mutual funds, money market, stocks, etc.

Credit Information

• Most recent statements from your bills, indicating minimum payments and account numbers.
• Name, Address, and Phone number of your landlord, or 12 months cancelled rent checks.
• If Applicable: Should you have no credit. Copies or your most recent utility bills will be needed.
• If Applicable: Copy of complete Bankruptcy and Discharge Papers.
• If Applicable: If you co-signed for a mortgage, car, credit card, etc, need 12 months cancelled checks. front and rear, indicating you are not making payments.

Personal Information

• Copy of Drivers License.
• Copy of Social Security Card.
• If Applicable: Copy of complete Divorce, Palimony, Alimony Papers.
• If Applicable: Copy of Green Card or Work Permit.
• If Applicable: If you own another home(s) - see below

If a Refinance or you own Rental Property

• Copy of Note & Deed from current loan.
• Copy of Property Tax Bill.
• Copy of Hazard (homeowners) Insurance Policy.
• Copy of Payment Coupon for current Mortgage.
• If Applicable: If property is multi-unit, need Rental Agreements.

Additional documents may be needed upon review of your file and on a case-by-case scenario.

When you are qualifying for a loan, a we will use your gross income. That means all the money you earn before taxes, including overtime, commissions, dividends and any other sources --as long as you can show a steady two year history for these sources.

Your monthly housing expense as a percentage of your monthly income is called the housing expense (a.k.a.: front-end) ratio. FHA suggests to spend about 29% of your income on your house payment (including the mortgage, property taxes, mortgage insurance and hazard insurance).

Calculate what your new monthly mortgage payment should be by using the formula:

Gross Monthly Income multiplied by 29% = Mortgage Payment.

Sometimes you have to stretch that percentage when you buy a house -- and that's one of the benefits of easier qualifying FHA home loans. To qualify, you're allowed to spend up to 35% of your income on your house payment, as long as everything else in your application shows that you can handle the "stretch."

One important thing FHA will do is compare your housing expense now to the expense you'll have if you buy a home. The smaller the increase, the stronger your application looks.

FHA Loans - Credit Qualifying for FHA Loans
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In addition to your ability to pay for a mortgage (as indicated by your debts and income), FHA will look at your ability to repay as indicated by your credit report. Your willingness will be judged by your credit report records -- that is, how well you've paid your loans and other debts in the past.

If you are unsure what your credit report is like, you may want to begin by getting a free credit report that you can view immediately online by going to freecreditreport.com ( we are not associated with this company) or you can call us to run your credit for you.

To help you understand why credit is important and why FHA will look at your credit, please try to understand the following:

• Perfect credit is what you are supposed to have.

Whenever you borrower money (credit cards, auto loans, student loans, etc.) you are making a commitment to that creditor to pay them back on the terms mutually agreed upon. If you are late making the payment then you broke the commitment and the lender can indicate this on your credit report.

The lender does not know why you are late, they just know that you broke the commitment agreed upon. They are not responsible on helping you manage your bills and debt, as they simply make and offer and the borrower accepts the terms.

This is why your credit is very important in qualifying for a home loan. Although you are supposed to have perfect credit, FHA will allow for minor past credit issues, as long as there is a "reasonable" reason why there was an issue.

FHA will look mostly at the last two years of your credit history. If there are some credit issues, we may be able to overcome them with sufficient explanations and supporting documents of why the issues occurred. Following is some the the reasons FHA will accept:

• Lost of Job
• Job Transfer
• Serious Illness

As long as it seems to make sense, and it is not just because you did not make the payment or because you had too much other debt.

You should not rule yourself out of qualifying for FHA loan to buy a home or refinance your existing mortgage because of credit issues until a mortgage professional has reviewed your credit.

There are some credit issues that you must allow for a certain time (seasoning) to past before you can qualify for a FHA loan. They are follows:

• Two years from the date of discharge for a Bankruptcy
• Three years from the date of Foreclosure

Also FHA would typically require that any outstanding collection accounts, judgments, charge off's be paid off in full before closing your loan but not necessarily before "approving" your loan.

If you have a "Federal Tax Lien" that is in a repayment agreement, you do not have to pay it off in full but you must be able to qualify with the monthly payment of the repayment agreement. "State Tax Liens" typically must be paid in full prior to closing your FHA loan.

Another advantage of FHA loans is that FHA does not require a credit scoring item called a FICO (Fair Issac Company) score. So if you have no credit at all you may still qualify for a FHA loan. If you have some credit you will typically need a minimum middle credit score of 620 to qualify for a FHA loan. If you are not sure what your credit score is, you can click here to order your credit scores online. This allows more home buyers to qualify to purchase or refinance a home.

When you apply to get pre-qualified for a FHA home loan, we will order a credit report for you. The credit report will show your record of payments on loans, charge cards and other similar debts. If you have never had a loan or a charge card, you can show that you have a good record of payment on your utility bills and rent payments.

We will review your credit report with you. Should you have some credit issues that prohibit you from qualifying for a FHA loan now, we will show you how to correct the issues so that you we can help you qualify to purchase a home or refinance your mortgage in the future or you can contact visit this law firm specialized in credit repair

FHA Loans - FHA Debt Ratio's Guidelines
............................................................................... In addition to your income, an FHA lender will look at your minimum monthly debts to calculate your income to debt ratios. The debt ratio's is what will determine "how much" of a FHA loan you can afford to qualify for.

Following are the two types of debt ratio's that will be use:

• Front-End Ratio - this is your gross income divided by the new PITI mortgage payment. This standard guideline is 29%.

• Back-End Ratio - this is your gross income divided by the new PITI mortgage payment and also you minimum monthly payments from you liabilities. The standard guideline is 41%

Following is the typical debts used to determine your qualifying ratio's:

Front-End Ratios

• your current and or future house payment

Back-End Ratios- the minimum required monthly payments on all of the following:

• Auto Loans - (except if there is less than 9 months left to pay off)
• Student Loans - (except if there is less than 9 months left to pay off)
• Personal Loans (except if there is less than 9 months left to pay off)
• Charge Cards - minimum required payments only.
• Child Support - (except if there is less than 9 months left to pay off)
• Alimony - (except if there is less than 9 months left to pay off)
• Federal Tax Lien Repayment Schedules - (if less than 9 months not calculated)

Following are monthly liabilities that are not used to calculate debt ratio's:

• Utility Bills
• Car & Health Insurance
• Cell Phone Bills
• any bills not reflected on your credit report.

The percentage of debts to income is called the debt-to-income (a.k.a.: back-end) ratios. A good goal is to spend no more than 38% of your income on all debts, including house payment. However, under FHA home loan guidelines you're allowed to spend up to 41% of your monthly income on housing and other debts -- if the rest of your loan application shows you can handle it.

An example of the income to debt calculation is as follows:

Income = $3,000

New Mortgage Payment = $900.

Minimum Monthly Payments = $300

"Mortgage" divided by "Income" = 30%

"Mortgage + Monthly Payments" divided by "Income" = 40%

In this scenario, your front-end is 30% and back-end is 40% which is acceptable for a FHA loan.

These ratios can also adjusted or exceeded if there are item(s) you can payoff, lower interest the interest rate, lower the loan amount, etc.

FHA is the most flexible lender regarding debt ratio's. Never rule yourself out of buying a home until you have spoken to a mortgage professional.

Learn exactly how much of a FHA loan you can qualify for by calling us directly (908) 296-0966

FHA Loan - Savings Qualifications
............................................................................... As for your savings, FHA is the easiest of all types of loans to qualify. FHA does not require that you have a savings or checking account and the money you will be using for your purchase does not have to be "seasoned" (meaning in the bank for the last three months), like conventional loans.

FHA will allow for a homebuyer to receive the down payment for the purchase of a home as a "Gift" (meaning you do not have to pay it back), from a family member or non-profit organization.

When purchasing a home with FHA financing and you are receiving a "Gift", you must provide the complete papertrail of the money's being giving to you. Typically, we will need the persons bank statement whom is giving you the money (to prove that they had it to give int he first place)

Additionally, if you have a 401K or retirement account, you may be able to draw or borrow from these funds for your down payment. If you must borrower against an account, you must be able to qualify with the monthly repayment amount.

If you have a bank account(s), you will need to provide three months of the complete bankstatments. FHA will review them to insure that you are balancing and managing your bills properly. Also they will look to see that the debts match up to your monthly payments and that the deposits are close to what you are netting on you paycheck. If there are any large deposits, they will need to be explained.

An occasional "NSF" may suffice if there is proper explanation as to why it occurred. At the time of your loan application, you should have your last three months bank statements with you.

If you have recently sold an item or have your money saved at home, you can still purchase a home now using your money. You will simply have to provide documents verifying the sale of the item or write a budget letter explaining how and why you save your money at home.

Should you be purchasing or refinancing a 3 or 4 unit property, FHA requires that you have a minimum of 3 months of the future mortgage payments in savings. These savings are called "Reserves".

Learn about how your Ratio's will affect your loan qualifications with a FHA real estate mortgage loan by contact us directly.

The form is broken into six separate sections. Each section is located below. The item number on the right side is from all legal HUD / Respa compliant forms. Please click on "Explanation of Fee" to learn more about the fee.

Loan Fee's

Below is a sample of a section of each section of a Good Faith Estimate that covers the loan fee's and charges of the lender. These fee's in this section are charged by the lender.

Following is a description of the normal non-reoccurring closing costs for a FHA loan. These fee's are typically paid by the buyer or owner. It may be negotiated that all or part of these fee's may be paid by the home seller or lender.

801. Loan Origination: This fee is usually known as a loan origination fee but sometimes is called a "point" or "points." It covers the lender's administrative costs in processing the loan. FHA regulates this fee to a maximum of 1% of the loan amount. Often this is expressed as a percentage of the loan. Generally, the buyer pays the fee, unless otherwise negotiated.

802. Loan Discount: Also often called "points" or "discount points," a loan discount is a one-time charge imposed by the lender or broker to either lower the rate at which the lender or broker would otherwise offer the loan to you or may be used to lock-in the interest rate for an extended period. This fee may vary.

803. Appraisal Fee: This charge pays for an appraisal report made by an independent FHA appraiser. Typically range from $300 - $500.

804. Credit Report Fee: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help decide whether or not to approve your loan and how much money to lend you. Typically $40 - $55.

805. Lender's Inspection Fee: This charge covers inspections, often of newly constructed housing, made by employees of your lender or by an outside inspector. (Pest or other inspections made by companies other than the lender are discussed in line 1302.)

806. Mortgage Insurance Application Fee: This fee covers the processing of an application for mortgage insurance.

807. Assumption Fee: This is a fee which is charged when a buyer "assumes" or takes over the duty to pay the seller's existing mortgage loan.

808. - 809. Mortgage Broker Fee: Fees paid to mortgage brokers would be listed here. A CLO fee would also be listed here.

810. Loan Processing Fee:This fee is for the administrative cost of processing your loan files required paperwork.

811. Underwriting Fee: Fee charged by investor for underwriting the submitted loan file and all of its paperwork.

812. Wire Fee: Fee charged by investor for wiring out the required funds to close the loan.

813. Flood Certification: Every FHA loan request a flood report to insure that it is not located in a flood zone. If property is in flood zone, owner required to obtain flood insurance.

Prepaid Items

The following fee's are reoccurring pre-paid fee's. You may be required to prepay certain items at the time of settlement / closing. Some of these items would be accrued interest, mortgage insurance premiums, and homeowners / hazard insurance.

901. Interest: Lenders require borrowers to pay the interest that accrues from the date of settlement / closing to the first monthly payment which is prorated daily based on the new loans interest rate.

902. Mortgage Insurance Premium: FHA Mortgage Insurance Premium fee is 1.5% of the loan amount. This fee may be financed into the loan amount. If you pay the FHA loan off within the first seven years, you may be entitled to a prorated refund of the MIP.

903. Hazard Insurance Premium: Hazard insurance protects you and the lender against loss due to fire, windstorm, and natural hazards. Lenders often require the borrower to bring to the settlement a paid-up first year's policy or to pay for the first year's premium at settlement.

904. Flood Insurance: If the lender requires flood insurance, it is usually listed here.

Escrow Impound Account Reserves

All FHA loans require the establishing of an escrow impound account. This account allows your property taxes and homeowners / hazard insurance to be included in your monthly payment and paid annually as needed.

1001. Hazard Insurance: Usually 2 months prorations of your annual homeowners / hazard insurance policy.

1002. Mortgage Insurance: Usually 2 months of the monthly FHA mortgage insurance premium. This monthly fee is calculated as .5% of the final FHA loan amount divided by 12 for the monthly prorations.

1003. City Property Taxes: Some cities have assessed property taxes which would be collected here. This will vary from city to city.

1004. County Property Taxes: The amount of property taxes collected will vary and would be prorated based on the number of payments made on the new loan to until your property taxes are due. May be from zero to eleven months in advance.

1005-1007. Other Prorations: These would be any other fee's such as HOA dues.

1008. Aggregate Adjustment: The lender is not allowed to collect more than a certain amount. The individual item deposits may overstate the amount that can be collected. The aggregate adjustment makes the correction in the amount on line 1008. It will be zero or a negative amount.

Title & Other Fee's

This fee's are all other fee's associated with obtaining a FHA loan. Although these are not lender fee's, lenders must provide a quote of the estimated fee. These quotes may vary significantly. Title charges may cover a variety of services performed by title companies and others. Your particular settlement may not include all of the items below or may include others not listed.

1101. Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. Responsibility for payment of this fee should be negotiated between the seller and the buyer.

1102-1104. Abstract of Title Search, Title Examination, Title Insurance Binder: The charges on these lines cover the costs of the title search and examination.

1105. Document Preparation: This is a separate fee that some lenders or title companies charge to cover their costs of preparation of final legal papers, such as a mortgage, deed of trust, note or deed.

1106. Notary Fee: This fee is charged for the cost of having a person who is licensed as a notary public swear to the fact that the persons named in the documents did, in fact, sign them. Usually $40 - $120.

1107. Attorney's Fees: You may be required to pay for legal services provided to the lender, such as an examination of the title binder. Occasionally, the seller will agree in the agreement of sale to pay part of this fee. The cost of your attorney and/or the seller's attorney may also appear here. If an attorney's involvement is required by the lender, the fee will appear on this part of the form, or on lines 1111, 1112 or 1113.

1108. Title Insurance: The total cost of owner's and lender's title insurance is shown here.

1109. Lender's Title Insurance: The cost of the lender's policy is shown here.

1110. Owner's (Buyer's) Title Insurance: The cost of the owner's policy is shown here.

Recording and Transfer Fee's

These fees are city, county and state fee's. They may be paid by you or by the seller, depending upon your agreement of sale with the seller. The buyer usually pays the fees for legally recording the new deed and mortgage (line 1201). Transfer taxes, which in some localities are collected whenever property changes hands or a mortgage loan is made, can be quite large and are set by state and/or local governments. City, county and/or state tax stamps may have to be purchased as well (lines 1202 and 1203).

Additional Settlement Charges:

These may be other third party fee's for services rendered in order to satisfy all loan, buyer, and seller requirements. All FHA loans require a termite report and clearance. Again, these fee's are negotiable between buyer and seller.

1301. Survey: The lender may require that a surveyor conduct a property survey. This is a protection to the buyer as well. Usually the buyer pays the surveyor's fee, but sometimes this may be paid by the seller.

1302. Pest and Other Inspections: This fee is to cover inspections for termites or other pest infestation of your home.

1303-1305. Lead-Based Paint Inspections: This fee is to cover inspections or evaluations for lead-based paint hazard risk assessments and may be on any blank line in the 1300 series.

If your transaction is a purchase, the total of all of these fee's would then be added to the amount of your down payment, which would total the amount needed to close your transaction.

For a refinance, these fee's could be added to your new loan amount, paid out of pocket, or financed into the interest rate with a lender credit.

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