New FHA Income Guidelines Deliver Approvals for Borrowers Facing Covid-19 Related Income Events
July 2022 has seen some pretty advantageous changes taking place for FHA (Federal Housing Administration) borrowers ...
These changes, effective July 7th, 2022 and mandatory for all case assignments as of September 5th, 2022, could prove to be game-changers for qualified FHA mortgage applicants who previously experienced a loss of income due to the COVID-19 pandemic or employment gaps.But while it's true that COVID-19 may have precipitated or kickstarted some of these changes, it was not the sole motivator.
It's no secret that the current housing market is facing challenges and has slowed down. FHA, as well as other government agencies, are looking for ways to meet those challenges and others head-on.
These newly-made FHA changes are much needed and go a long way to accomplishing just that. They come at a pivotal time for the American housing market.
Why?
There is strong evidence that COVID-19 took a real toll on our economy. Many Americans suffered what is called a "COVID-19-related economic event".
A "COVID-19-related economic event is defined as:
"A temporary loss of employment, temporary reduction of income, or temporary reduction of hours worked during the Presidential declared COVID-19 National Emergency".
These types of economic events "trickle down". They cause employment and income issues for households, hopeful homebuyers, and those wishing to refinance.
Again why?
Employment and income greatly impact the type of financing options available to borrowers. In some cases, it can affect if financing options are available to them.
These new changes address that reality and meet it head-on. The July 7th FHA changes directly speak to the following FHA underwriting guidelines:
- Commission Income
- Part-Time Employment
- Overtime/Bonus/Tip Income
- Gaps in Employment
- Primary Employment
- Employment by Family-owned Business
- Self-Employment Income
- Gaps in Self-Employment Income
The changes made to FHA income guidelines allow for greater underwriting flexibility when conducted in the FHA TOTAL (Technology Open To Approved Lenders) Mortgage Scorecard as well as manual underwriting.
Positive changes have been made to what is calculated as effective income and how effective income is now calculated.
So if you're hoping to:
- Buy a home
- Refinance a home
- Have not recently spoken with a lender
- Were denied mortgage approval under old guidelines
Contact a mortgage lender and inquire again. The changes referred to above, as well as other recent changes made and those coming in the future, may deliver a different outcome should you newly apply for a mortgage.
Contact me now to find out more ...
Are you hoping to Construct, Buy, Refinance or Purchase a home or investment property in Chicagoland or somewhere else in Illinois or Wisconsin?
Looking for mortgage financing answers, options, solutions, and experienced assistance?
Contact me! I'll put my 40 years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:
Gene Mundt
Mortgage Originator -NMLS #216987 - IL Lic. 031.0006220 - WI License #216987
American Portfolio Mortgage Corp
NMLS #175656
Direct: 815.524.2280
Cell/Text: 708.921.6331
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Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort,
Mokena, Manhattan, Frankfort Square, Joliet, Shorewood, Elwood, Lockport, Wilmington, Crest Hill, Symerton, Braidwood, Channahon, University Park, Beecher, Plainfield, Bolingbrook, Romeoville, Tinley Park, Homer Glen, Crete, Peotone, Naperville, etc.), DuPage County, Kane County, Grundy County, the City of Chicago, Cook County, and elsewhere within IL & WI.
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