One of the key differences with conventional loans vs. FHA loans is that FHA loans in California require a non-borrowing spouse’s credit report to be run at application even if that spouse is not going to be on the loan. The credit quality of that non-borrowing spouse cannot be a reason for denial, but that non-borrowing spouses debt obligations (auto loans, credit cards, student loans) have to be included in the debt-to-income ratio for FHA loan qualification. Additionally any major collections or past due charge-offs may become a factor in FHA loan approval. Now the difference with conventional loans is the non-borrowing spouses credit report does NOT have to be run. Therefore conversely, their debt obligations do not have to be included in the debt-to-income ratio for loan qualification.
So to clarify, if you have a spouse with a lot of debt obligations in their name you don’t want to be included in the debt-to-income ratio for qualification, you may want to consider a conventional loan vs. FHA. Conventional loans offer as low as 3% down payment loans with no up front mortgage insurance and lower monthly mortgage insurance than FHA.
If you have any questions about getting approved for a FHA, conventional (or VA) home loan in California please don’t hesitate to call at 858-922-7899 or email at homeloan8@gmail.com
Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA, VA, conventional, Homepath specialist)
858-922-7899
homeloan8@gmail.com
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