HB-1-3555 (03-09-16) SPECIAL PN 11-1 - PDF document

HB-1-3555 (03-09-16) SPECIAL PN 11-1 R
HB-1-3555 (03-09-16) SPECIAL PN 11-1 Revised (04-30-20) PN 536 CHAPTER 11: RATIO ANALYSIS if the applicant’s repayment income can for principal, interest, taxes and insurance (PITI) and totathere is flexibility to apply these standards ent income, as determined by the lender meet the Agency’s standards for both the PITI and TD ratios. Applicants are considered to have repayment ability if their proposed monthly housing expense does not exceed 29 percent of their repayment income. Monthly Principal and interest payment on the mortgage; Hazard insurance premiums, whether escrowed or not; Real estate taxes, whSpecial assessments. App

licants are considered to have repayment
licants are considered to have repayment ability when their total debts do not exceed 41 percent of their repayment income. HB-1-3555 11-2 incurred by the applicant. limited to: a credit reportverification of deposits, electronic verifications, etc. All applicant open debts/accounts date must be included in the total debt Principal, interest, real estate taxes, hazard insurance, monthly portion of the mains per the credit report, creditor exceed five percent of the monthly repayment income. Credit cards, lines of credit, secured/unsecured, etc. must include the minimum itor verification in the total debts. If the credit repo

rt shows HB-1-3555 (03-09-16) SPECIAL
rt shows HB-1-3555 (03-09-16) SPECIAL PN 11-3 Revised (04-30-20) PN 536 require an estimated payment to USDA will not require a revolving account to be closed. full outstanding balance on the account every month. The lender may utilize the credit report to30-day accounts that are paid monthly in full are not included in the total debt If the credit report reflects late payments in the last 12 months, the lender must Court Ordered Debts: Child sincluded in the total debt ratio unless the applicant has a release of liability from the court/creditor and acceptable evidence is documented. e applicable agreement/court order to e

nts remaining may For GUS transactions,
nts remaining may For GUS transactions, the lender will manually enter the obligation(s) as a underwriting recommendation of “Accept” to be downgraded to a “Refer.” ent agreements are current. Refer to Chapter 10 for court ordered debt guidance and program eligibility. Child care expenses Child care expenses are not required to be included in the monthly debt ratio. HB-1-3555 11-4 Student loans Fixed payment loans: A peent may be used in the debt ratio when the lender retains documentation to vefully amortize/pay in full the debt at the etypes of repayment agreements which are following: creditor. applicant. The applicabl

e Student loans in a “forgiveness” plan/
e Student loans in a “forgiveness” plan/program remain the legal responsibility of the applicant until they are released of liability from the creditor. The applicable A retained dwelling that has been rented ligation omitted when the applicant rest, real estate The manual entry of a rental income loss to the monthly debts in GUS will not require an Accept loan file to be downgraded to a Refer. HB-1-3555 (03-09-16) SPECIAL PN 11-5 Revised (04-30-20) PN 536 If the credit report reflects late mortgageRefer to Chapter 9 for reease of Liability mains on the promissory note) total debt ratio unless evidence can beprior to loan

acreditor/servicer to document the paym
acreditor/servicer to document the paymenfull mortgage obligation must beforward. must document the prverification from the creditor/servicer. full mortgage obligation must be HB-1-3555 11-6 e applicant may be a co-borrower, joint the debt) has successfully made the prior to loan aAcceptable evidence includes but not is limited to: canceled checks, money order lication will require the monthly liability to be inclIf the applicant can provide conclusive evidence from the creditor that they will Debts identified as “indivian is solely in the applicant’s name). Business debts Acceptable evidence includes canceled checks or ba

nk statements from a business yment to
nk statements from a business yment to be included in must include the debts of the NPS unless specifically excluded by state law. HB-1-3555 (03-09-16) SPECIAL PN 11-7 Revised (04-30-20) PN 536 Refer to Chapter 10 for collection account guidance. Judgment accounts Refer to Chapter 10 for Federal and Charge-off accounts are not required to have a payment included in the monthly debts. Refer to Chapter 10 for charge-off account guidance. Automobile allowances and expense account payments An automobile or allowance will not cancel out a monthly debt for an automobile Refer to Chapter 9 for automobile and Deferr

ed debts and balloon debts that will req
ed debts and balloon debts that will require payment in full upon their due Include Federal or State income tax reincome. Refer to Chapter 10 for Federal Income Tax agreement eligibility. HB-1-3555 11-8 Lease payments DEBT RATIO WAIVERS AND COMPENSATING FACTORS rcent and the Total Debt ratio may exceed household has higher repayment ability. Purchase Transactions: Debt ratio waivers GUS Accept loans: GUS files that receive an Accept or Accept Full Documentation underwriting assistance: Acceptable ratio thresholds are met: a.The maximum PITI ratio cannot exceed 32 percent, and b. The maximum TD ratio cannot exc

eed 44 percent; And: 2. The credit scor
eed 44 percent; And: 2. The credit score of all applicant(s) is 680 or greater; And: At least one of the acceptable compensating factors listed below is identified and HB-1-3555 (03-09-16) SPECIAL PN 11-9 Revised (04-30-20) PN 536 s from a family member will not be will not be considered an acceptable compensating factor. greater than three months ofcation of deposit (VOD) or two most recent consecutivent the average balance held by the applicant are reeligible for consideration as a compensating factor. their current primary employer for a minim, comparable HUD/FHA/VA or Fannie Mae form, or other Applicants that have rece

ived Social Security benefits or retirem
ived Social Security benefits or retirement income for tion to support the ensating factor is not applicable for self-rrence with the debt ratio factors. Lenders may utilize Underwriting and Transmittal SummaryConditional Commitment for Loan Note Guarantee is issued. Refinance Transactions: Debt ratio waivers GUS Accept loans: HB-1-3555 11-10 GUS files that receive an Accept or Accept Full Documentation underwriting assistance: Streamlined-assist refinance loans do not require debt ratio calculations, and therefore no debt ratio waiver. limited to the maximum purchase debt ratio Non-Streamlined and Streamlined refinanth

e compensating factors that juacceptable
e compensating factors that juacceptable compensating factgreater than three months eligible for consideration as a compensating factor. Conditional Commitment for Loan Note Guarantee is issued. MORTGAGE CREDIT CERTIFICATES certificate (MCC) that provides a Federal income tax credit to a qualified first-time oderate-income homebuyer. Refer to Chapter 9 for MCC HB-1-3555 (03-09-16) SPECIAL PN 11-11 Revised (04-30-20) PN 536 FUNDED BUYDOWN ACCOUNTS Funded buydown accounts are designed to reduce the borrower’s monthly payment rate is fixed and will not change for the life of the loan. Temporary buydowns are eligible when the a

pplicable guidelines are met. Tempora
pplicable guidelines are met. Temporary buydown account requirements: full note rate; The borrower must agree in writing that the temporary buydown funds will be placed in an escrow and paid directlyThe buydown account must be fully funded at origination; and The funds must be placed in an escrow account with a financial institution HB-1-3555 11-12 SECTION 8 HOMEOWNERSHIP VOUCHERS Section 8 Homeownership Vouchers may be usOBLIGATIONS NOT INCLUDED IN DEBT-TO-INCOME RATIOS included in total debt-to-income ratio calculations Medical collections; Federal Insurance ContributiCollateralized loans secuUtilities; Open accounts with zero