Did you know that FHA requires a manual underwrite on declining income? It’s true!
For self-employed borrowers whose income has declined by more than 20% in the most recent 24-month period, a manual underwrite is necessary. This means that additional requirements must be met, including having 3 months of PITI reserves for 1-2 unit properties and 6 months for 3-4 unit properties.
In addition, one FHA-recognized compensating factor is also needed to qualify for the loan. The maximum manual debt ratios allowed are 40% for the front-end ratio and 50% for the back-end ratio.
It’s important to be aware of these specific requirements when applying for an FHA loan with declining income. Contact MortgageDepot for more information and assistance with your mortgage needs!
