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Changes to Maximum Qualifying Ratios

To:   VHDA Originating Lenders

Date:  December 22, 2008

Re:   Changes to Maximum Qualifying Ratios

Maximum Debt to Income Ratio 50.00% for all VHDA Loans.

All VHDA loans (including FHA, VA, RHS, PMI or uninsured loans) will be limited to a maximum of 50.00% debt to income ratio when using an automated underwriting Approve/Eligible Decision.  Stated program ratio guidelines will apply for manually approved loans.  This new restriction is effective for loan reservations made beginning February 1, 2009.

FHA Plus - Automated Underwriting Approvals:

VHDA will continue to accept FHA Total Scorecard approvals for FHA Plus with the following limitations:

Loans may exceed FHA’s standard ratio requirements of 31% payment to income and 43% debt to income (to a maximum of 50% debt to ratio)  only if the applicable credit score is 620 or above. Credit scores below 620 and non-traditional credit must adhere to the maximum 31%/43% FHA program ratios.

FHA Plus - Manual Approvals on FHA Total Scorecard Referrals:

FHA Plus manual approvals will be eligible only with prior review by VHDA.  Loans with manual decisions requesting a waiver by VHDA must be submitted by the FHA Underwriter based on their assessment that the loan meets all FHA guidelines along with supporting justification for the loan decision.  The FHA Underwriter must submit at minimum the VHDA Waiver Request, loan application (1003) FHA Underwriting Transmittal (92900LT), credit report and paystub.

These new requirements are effective with loan reservations made beginning February 1, 2009.

FHA Plus – Second Mortgage Remains Maximum 5% of Sales Price

Lenders are reminded that FHA maximum base loan amounts will be reduced to a maximum 96.50% for case numbers assigned beginning January 1, 2009.  While the FHA Plus second mortgage will remain unchanged at a maximum of 5% (lesser of sales price or appraised value). 

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