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FHA Loan Underwriting

Once your FHA Loan Application is completed and all of your documentation has been submitted to your lender, an FHA DE Approved Underwriter will then review your application and documentation to determine if your file meets the criteria for FHA Loan Approval.

What does FHA Loan Underwriting look for?

Some of the important things that are reviewed in FHA Mortgage Loan Underwriting are:

  • FHA Loan Income and Debt-to-Income Ratio Requirements
  • FHA Loan Credit History and Credit Score Requirements
  • Employment History
  • Savings and Assets, Ability to Make Down Payment
  • Appraisal of Property

To determine if you meet current FHA Loan Requirements, the Underwriters will look at:

  • Your income and your monthly expenses. Standard FHA Loan Requirement debt-to-income ratios are 31/43. These ratios may be exceeded with compensation factors.
  • Your credit history (this is important, but FHA's credit standards are flexible).A 640 FICO credit score is required to obtain an FHA approval.

What documentation will I need to submit my loan to underwriting for FHA Loan Approval?

Once you have completed your application, your lender will need certain documentation from you through FHA loan processing before your loan can be submitted for FHA Loan Underwriting. Some of the documentation that will be requested includes:

  • W-2s for the past two years.
  • 2 most recent year-to-date paycheck stubs (within 30 days).
  • Residence Address – Past 2 years and landlord information if applicable.
  • Name and address of each employer for the past 2 years.
  • 2 years’ tax returns, including all schedules if self employed or commission (1099).
  • Last 2 months bank statements for all checking, savings, investment and retirement accounts (all pages included).
  • Divorce Decree and 12 months’ proof of child support, when applicable.
  • Address of other real estate owned.
  • Loan information on all real estate owned.
  • Copy of your Drivers License and Social Security Card.
  • Copy of the sales contract for the subject property with all addendums if applicable.

Once your loan application and all of the requested documentation has been submitted, it is be verified by an FHA DE Underwriter who can then issue an FHA Loan Approval once all requirements have been satisfied.

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 FHA Refinance Loan Programs

Rate/Term Refinance (No Cash Out)
The FHA Rate/Term Refinance is for borrowers who currently have a conventional fixed rate or ARM mortgage and wish to refinance into an FHA Mortgage. This program helps borrowers who wish to have a stable, FHA insured fixed rate mortgage.

FHA Cash-Out Refinance

A FHA Cash Out Refinance Loan is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.

FHA Streamline Refinance
The FHA Streamline Refinance is designed to lower the interest rate on a current FHA mortgage or convert a current FHA adjustable rate mortgage into a fixed rate. An Streamline FHA Refinance Loan can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no credit check, no appraisal, no qualifying debt ratios and no income verification.


 FHA Refinance Loan FAQ's

Are there any out of pocket expenses for an FHA Refinance Loan?
Generally, there are no out-of-pocket expenses incurred with an FHA Home Refinance, other than the appraisal fee. FHA Refinance Guidelines allow all other closing costs, including lender fees, to be included in the new loan amount, provided that the home will appraise for that amount.

Can I take cash out of my home with an FHA Refinance?
Yes, with an FHA Cash Out Refinance, the home owner obtains a new FHA Mortgage Refinance for more than the amount owed on their current mortgage; meaning the homeowner pays off the current mortgage and then has additional cash to use however they want. They maximum loan amount for an FHA Cash Out Refinance is 85% of the homes current appraised value.

What are the guidelines for an FHA Refinance Loan?
If the borrower wishes to take cash out of the property, then the maximum FHA Home Loan Refinance amount is 85% of the current appraised value. If the borrower does not take cash out then the maximum financing will be 97.75% of the appraised value of the home or the amount you are refinancing plus closing costs, whichever is lower.

Why should I consider refinancing into a FHA-insured mortgage?
FHA Refinance Loans do not come with prepayment penalties, have no teaser rates nor balloon payments. They are offered at market rate with terms up to 30 years and are fully amortized, meaning that you pay towards principal and interest every month.

What if I have a prepayment penalty and other refinancing costs and there isn’t enough equity in my home to refinance?
If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new FHA Mortgage Loan Refinance, then you should ask your lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. Offering either of these options is at the discretion of the lender.

Does it matter that the value of my home is now less than what I still owe?
The mortgage lender considering the refinance will have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home’s value.


FHA Mortgage   |   FHA Refinance   |   FHA LOAN REQUIREMENTS   |   FHA MORTGAGE CALCULATOR   |   FHA MORTGAGE RATES

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