It has been true that non-conforming loans (the real name for "sub" prime) made it possible for millions of people to get started with home ownership who otherwise may not have been able to. Unfortunately because of the errors and crimes of a very small percentage that optimal solution has all but disappeared. Now we are back to where we were about 8 years ago where FHA is just about the best solution for First Time Home Buyers.

FHA allows financing up to 97% of the sales price and currently you can still use Down Payment Assistance Programs to provide the additional 3%. Otherwise the 3% can come from a relative, a domestic partner, spouse or your boss.

Where FHA is strict is on what is called the Debt-To-Income ratio. (You can use the calculator at Novation to roughly calculate yours.) The maximum DTI accepted by FHA with very rare exceptions (like on new construction) is 43% - vastly lower than the up to 60% allowed by non-conforming which is all but gone!

FHA is not so score driven but other factors within the lender's guidelines generally like to see at least a 580 (Novation allows down to a 550 with mitigating factors). FHA also allows for alternative credit such as rent, utilities and other consumer credit. The credit must be added to the credit report for fastest processing and if you are working with a Novation rep they will handle this for you.

Got student loans? If you have at least a 12 month deferral those can be excluded from your debt-ratio. All collections except medical, however, must be paid. The alternative credit must consist of at least 3 trade lines with no derogatory information.

When you are ready to find out more about What FHA Can Do For You make sure to attend one of the events or call 678-946-0100 and speak with a qualified FHA Mortgage Consultant.


Who is Novation Mortgage? Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender ID Number: 25600-0000-2 Equal Housing Lender