Features

• FHA income guidelines help manage risk for the lender, the FHA and the borrower by ensuring the borrower is capable of repaying the loan. The lender compares the income of all borrowers obligated on the loan to the total of their monthly debts, expressing it as a percentage called the debt-to-income ratio.
  
  

Types

• The FHA considers only income that is stable, verifiable and projected to continue for at least the next three years. FHA requires full documentation of income in the form of pay stubs, tax returns complete with all schedules and W-2s for all borrowers on the loan. Self-employed borrowers must supply tax returns complete with profit and loss statements.
  
  Lenders may also order tax transcripts directly from the Internal Revenue Service and a verification of employment form directly from the employer.
  
  

Considerations

• The FHA has two debt-to-income guidelines: one for the mortgage payment expense to their monthly gross income; the other for the total of all monthly obligations to their monthly income. The first ratio may not exceed 31 percent and the second may not exceed 43 percent.