FHA Loans and the ACA

I'm in the process of buying a home and going through the loan process. This is my first time buying a home and I know nothing of real estate law or various kinds of loans. But I'm learning fast!

When I found a home that I liked and was within my price range, I thought, my real estate agent sent me to Wells Fargo where their agent set me up with an FHA loan.

An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan which is provided by a FHA-approved lender. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. en.wikipedia.org...

The problem was a new law, called the Dodd-Frank Act, the “Ability-to-Repay". Before January 2014, the FHA lenders determined the loan amount a person may qualify for by determining their debt to loan ration. Debt refers to things like your monthly minimum credit card payments, car payments, etc. So, when lenders look at your finances, they can't offer a loan that will exceed 43% of you monthly income after considering all of your debts, including the new FHA loan.

But now that the ACA has mandated everyone must have health insurance, and it's no longer your choice to buy it or not, your health care premium is now part of your debt ratio. For that reason, many people with low to medium incomes, including myself, can no longer qualify for many loans.

But while the regulations are intended to benefit consumers, some experts say that, like the Affordable Care Act, the changes may lead to complications and unintended consequences.

One example they cite is a provision in the rule that requires borrowers’ debt to make up 43 percent or less of their gross income.

“People who are right on the line of qualifying right now may not qualify in 2014” because of the policies set by Dodd-Frank, says David Zugheri, executive vice president of Envoy Mortgage in Houston.
www.washingtonpost.com... 06c776266ed_story.html

According to my agent, the ACA has knocked the middle class right out of the investment real estate market. I had no idea!

Fortunately, conventional loans don't have such requirements, yet, and I was able to procure a conventional home loan for the house I like. We've put in an offer! (It's a foreclosure) Fingers crossed!

First, good luck.

As for your thread, I'm not surprised. We haven't even BEGUN to see the problems this stupid health insur...erm...care law is going to lay down onto the populace at large.

Having just purchased a home about a year ago, before this seems to taken affect, the debt to income rations you have to be careful with.

Even a tax deduction effects it, so I would easily see the ACA hurting peoples chances, I had not considered that aspect of it.


I do have advice, ditch wells fargo, I went through them, Worst experience ever trapped in a hotel for 4 months while they dragged their feet through closing.

Every deadline was met late, most often not even started till the last minute, if you keep them as your lender RIDE THEM every day.

I would strongly urge a credit union.

reply to post by Krazysh0t


Thanks!

Yeah, the FHA loan that Wells Fargo was able to offer me was so low, the only homes that I could afford were/are in disrepair, and banks won't finance homes that can't pass their inspections. FHA does offer special loans for building and repair, but I couldn't afford 2 loans, nor would they offer them!

reply to post by benrl


Yeah. I already ditched Wells Fargo. Way to many problems. I got a loan through Guild Mortgage Company.

Congrats on the house purchase. I am really hoping to buy my first house soon. Kinda funny because it will be my first house for the second time lol.

I owned it years ago, let my wife and kids have it after we divorced. Kids are grown and it went into foreclosure. Her redemption period is up in a couple weeks.

Nice little place in the sticks with just under 5 acres. I'm pretty sure I would have trouble getting a loan as well so my GF is going to buy it cash money and sell it to me on land contract.

Well, the seller (Fanny Mae) accepted my offer, and I signed all the disclosure papers today! My first health care insurance premium doesn't come due til the middle of May. Hopefully it won't show up as a new debt and adversely impact my debt to loan ratio and fowl up escrow! Fingers crossed!