VA Guidelines for Covid-19

Income Verification

Lenders may continue to use good judgement and flexibility when verifying a borrower’s income and determining whether that income is stable and reliable and will follow standard VA guidelines.
Third-party services may be used to provide employment and income verification (please note additional fees associated with these services cannot be charged to borrower).
Note: The VOE flexibilities previously announced by VA have not been extended and did expire 04/01/2021.

Income Analysis

VA’s guidelines generally require income to be stable and reliable for 2 years. However, borrowers’ income impacted by COVID-19 may continue to be reviewed as follows:
Any period in a borrower’s income (i.e. furlough, curtailment of income, etc.), should not be considered a break in employment or income provided they have returned or anticipated to return to work in the same capacity and income levels. In addition to standard verification documentation Borrower’s should…

FHA Student Loan Payment Calculation For 2021

The U.S. Department of Housing and Urban Development (HUD) has updated the payment calculation of monthly obligation for student loans. The change is effective for all case numbers assigned on or after August 16, 2021

Lenders must include all student loans in the Borrower’s liabilities, regardless of the payment type or status of payments.

Required Documentation: If the payment used for the monthly obligation is less than the monthly payment reported on the Borrower’s credit report, the Lender must obtain written documentation of the actual monthly payment, the payment status, and evidence of the outstanding balance and terms from the creditor or student loan servicer. The Lender may exclude the payment from the Borrower’s monthly debt calculation where written documentation from the student loan program, creditor, or student loan servicer indicates that the loan balance has been forgiven, canceled, discharged, or otherwise…

FHA now allowing 0.5% on Student Loans instead of 1%
On Friday, the Federal Housing Administration (FHA) announced updates to its student loan monthly payment calculations to take steps to remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt.

The updated policy more closely aligns FHA student loan debt calculation policies with other housing agencies, helping to streamline and simplify originations for borrowers with student loan debt obligations.

This announcement enhances FHA’s ability to serve one of its core demographics—first-time homebuyers.

For all outstanding student loans, regardless of payment status, the payment must be calculated as follows:

If the payment on the credit report is greater than $0, use
the payment reporting on credit, or
the actual documented payment
If the payment on the credit report is $0, use
0.5% of the outstanding loan balance
If documented that the loan…