How to Qualify for a FHA Home Loan and Refinancing in California

We are often asked about verification of rent or mortgage in when it comes to qualifying for an FHA home loan or refinancing an FHA mortgage in the state of California. There are a few things you will need to know before completing the application process. This is information directly from the Federal Housing Administration:

Where a loan underwritten using the TOTAL Scorecard receives an Accept recommendation no verification of rent or mortgage is required.

For manually underwritten loans, the lender must determine the borrower’s housing obligation payment history through the credit report;

verification of rent received directly from the landlord (for landlords with no Identity of Interest with the borrower);
verification of mortgage received directly from the mortgage servicer; or
a review of canceled checks that cover the most recent 12-month period.

The lender must verify and document the previous 12 months’ housing history. For borrowers who indicate they are living rent-free, the lender must obtain verification from the property owner where they are residing that the borrower has been living rent-free and the amount of time the borrower has been living rent free.

FOR NO CASH OUT REFINANCES

For manually underwritten mortgages with less than six months of mortgage payment history, the borrower must have made all payments within the month due. For manually underwritten mortgages with greater than six months history, the borrower must have made all mortgage payments within the month due for the six months prior to case number assignment and have no more than one 30-day late payment for the previous six months for all mortgages.

If the mortgage on the subject property is not reported in the borrower’s credit report, the lender must obtain a verification of mortgage to evidence payment history for the previous 12 months.

FOR CASH OUT REFINANCES

The lender must verify that the borrower has made all payments for all their mortgages within the month due for the previous 12 months, or since the borrower obtained the mortgages, whichever is less.

If the mortgage on the subject property is not reported in the borrower’s credit report or is not in the name of the borrower, the lender must obtain a verification of mortgage, bank statements or other documentation to evidence that all payments have been made by the borrower in the month due for the previous 12 months.

For additional information see Handbook 4000.1 II.A.5.a.iii.(C); II.A.8.d.v.(A)(2); II.A.8.d.vi.(A)(1)(b);

II.A.8.vi.(B)(1)(b) available at

http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh

If you have any further questions related to this topic do not hesitate to contact ABLEnding today. We have mortgage professionals that will go above and beyond to make certain you understand all the fine print when it comes to qualify for an FHA home loan or any type of home mortgage in the state of California.