Both programs offer extremely attractive interest rates, incredibly flexible qualifying, and also support less than perfect credit. Overall the programs are very favorable to producing an outcome that is practical and affordable. However, there is something you need to know about government mortgages that can be particularly difficult depending on your financial situation. Here is what to know…
FHA mortgages depending on the state in which you live in is a community property state it will require you to look at the debt of your spouse. This means if you for example are applying for a loan and it’s just you on the application but you’re married in the state of California as an example, and your spouse has lots of debt, your spouse’s debt will count against you in your debt to income ratio.
This also holds true regardless of what state on a VA loan. If you’re looking for a VA mortgage and you are married the mortgage company is going to have to pull the credit report of your spouse even if your spouse is not on the loan. This can be potentially problematic if you’re trying to get qualified to purchase a house and you were married and you’re using one of these two mortgage loan programs as your spouse’s debt even if it’s not yours can go against you in your debt to income ratio. This means if your spouse is not on the mortgage, but they have a car payment for example of $500 a month that will hurt your borrowing power. So a few options and ways around us
Option 1 -The first option is to make sure your spouse has very low monthly debt or have your spouse pay off their debt.
Option 2 -look for a lower loan amount or a lower interest rate or a lower purchase price.
Option 3- Get a cosigner if that is available to you. This is virtually limitless on an FHA loan, but on a VA loan, it will require the down payment to be 12.5%.
Just because a lender has the ability to originate FHA and VA loans does not automatically specifically make them an expert especially in the tiniest of areas like this that can have life-changing guidelines that might impact you and your family’s budget when it comes to purchasing or refinancing a home. Be smart, and work with an experienced lender.
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