NEW DTI RESTRICTION FOR FHA LOANS WITH 640-659 SCORES

Due to the under-performance of certain loans with scores between 640-659, we have concluded that an additional underwriting overlay is necessary.  Effective for all new submissions beginning Thursday, April 12, the maximum allowable DTI for all FHA loans with low middle credit scores between 640-659 will be 45.00% (except for cases meeting the criteria described below).

We will allow higher DTIs if ALL of the following parameters are met:

(1) DU Total Scorecard approve/eligible;

(2) Purchase and Rate/Term refis;

(3) ≤90% LTV;

(4) No gift of equity;

(5) 1-unit properties.

This guidance does not affect our existing overlays for government loans with scores between 600-639.

If you have any questions, please contact your AE.

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