What is an FHA loan
                     What is an FHA 
loan?
www.ospreymortgagelending.com
 FHA home loans are mortgage loans that are insured 
against default by the Federal Housing Administration 
(FHA).
 FHA loans are available for single-family and 
FHA Loans multifamily homes.
 FHA loans allow individuals who may not qualify for a 
conventional mortgage to obtain a loan, especially 
first time home buyers.
 FHA doesn't issue loans or set interest rates, it just 
guarantees against default.
Employment
• Complete Income Tax Returns for the past 2-years
• W-2 & 1099 Statements for past 2-years
• Pay-Check Stubs for the past 2-months
Documents • Self-Employed Income Tax Returns and YTD Profit & 
Loss Statements for the past 3-years for self-
needed for employed borrowers
FHA loan Savings
• Complete bank statements for all accounts for the 
past 3-months
• Recent account statements for retirement, 401k, 
Mutual Funds, Money Market, Stocks, etc.
Credit
•Recent bills & statements indicating account numbers and minimum 
payments
•Landlord's name, address, telephone number, or 12- months cancelled rent 
checks
•Recent utility bills to supplement thin credit
•Bankruptcy & Discharge Papers if applicable
•12-months cancelled checks written by someone you co-signed for to get a 
mortgage, car, or credit card, this indicates that you are not the one making 
the payments.
Personal
•Drivers License
•Social Security Card
•Any Divorce, Palimony Alimony or Child Support papers
•Green Card or Work Permit if applicable
•Any homeownership papers
Refinancing or Own Rental Property
•Note & Deed from any Current Loan
•Property Tax Bill
•Hazard Homeowners Insurance Policy
•A Payment Coupon for Current Mortgage
•Rental Agreements for a Multi-Unit Property
Your monthly costs should not exceed 29% of your gross 
monthly income for an FHA Loan. Total housing costs often 
lumped together are referred to as PITI.
 P = Principal
 I = Interest
 T = Taxes
 I = Insurance
What can I  Examples:
 Monthly Income x .29 = Maximum PITI
afford? $3,000 x .29 = $870 Maximum PITI
 Your total monthly costs, or debt to income (DTI) adding PITI and 
long-term debt like car loans or credit cards, should not exceed 
41% of your gross monthly income.
 Monthly Income x .41 = Maximum Total Monthly Costs
$3,000 x .41 = $1230
$1,230 total - $870 PITI = $360 Allowed for Monthly Long Term 
Debt
 FHA Loan ratios are more lenient than a typical conventional loan.
Yes, generally a bankruptcy won’t preclude a borrower 
from obtaining an FHA Loan. Ideally, a borrower should 
have re-established their credit with a minimum of two 
credit accounts such as a car loan, or credit card. Then 
wait two years since the discharge of a Chapter 7 
Bankruptcy bankruptcy, or have a minimum of one year of 
repayment for a Chapter 13 (the borrower must seek 
and FHA the permission of the courts). Also, the borrower should 
not have any credit issues like late payments, 
loans collections, or credit charge-offs since the bankruptcy. 
Special exceptions can be made if a borrower has 
suffered through extenuating circumstances like 
surviving a serious medical condition and had to 
declare bankruptcy because the high medical bills 
couldn't be paid.
Information source
www.ospreymortgagelending.com