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How does FHA treat a private mortgage loan on vacant land?

I am looking to purchase a home, but having issues with debt to income ratio. We purchased vacant land about 4 years ago through a private seller (owner financed). Currently, we owe much more than the property is valued. (no equity). Will FHA include this loan in my debt to income ratio? and if so, is there any chance that they would approve a loan regardless of the debt to income ratio being over the aggressive ratios if we can show that we have been able to pay rent for almost 2 years (more than our monthly mortgage on new purchase would be) and keep up with all our other bills? by RachNu_599_280 from Fort Benton, Montana. Jun 19th 2012 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,659 contributions

All debt will be considered when determining eligibility.. So if you have an owner financed loan, the lender will know about it, and you must disclose it.. That being said, there are lenders out there that will allow higher DTI's.. I just closed a loan where the borrower had a 54.99% DTI. I can tell you this.. If you're using a local bank or credit union, they are not going to allow higher DTI's... The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 19th 2012
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Christina Witt (cwitt@wewalkyouhome.com)
#5 ranked lender in Montana - 5 contributions

Unfortuantely FHA will count the land payment in your debt to income ratios. HOWEVER, FHA also allows non-occupant co-borrowers. Do you have a realitive who will be willing to be on the loan with you. Their profile (credit, income and liabilities) can be considered to offset your debt to income woes.

Jun 19th 2012
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James Barath (JamesBarath)
#9 ranked lender in Indiana - 351 contributions

Although FHA has a set guidance on debt-to-income (DTI) ratios, FHA TOTAL Scorecard and most investors allow for higher DTI ratios. Find out exactly what your current qualifying DTI is and compare with other local mortgage bankers to see if they can get you approved. Good luck.

Jun 19th 2012
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David Van Waldick (Dave Van Waldick)
#113 ranked lender in California - 11 contributions

Rachael,There are many ways to get approved under FHA guidelines that may or may not include the land loan you reference.The best way to know is to complete a loan application and get underwriting per-approved. To get quickly pre-approved, go to our nationwide, proprietary, Home Purchase Loan pre-Approval system at www.ePrequal.com. By completeing the simple questionairre, in minutes you will receive a response and if pre-approved a personalized pre-approval certificate, detailed financial summary, loan options and more. It's like having an experienced Loan Officer and Underwriter at your fingertips 24/7. No waiting and no sales pressure. Start now. www.ePrequal.com.David Van WaldickNational Loan AdvisorePrequal.com, LLCP: (888) 930-4223www.ePrequal.com "One Minute Home Loan pre-Approvals"

Jun 19th 2012
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Linda Wintersteen (Linda123)
#63 ranked lender in Arizona - 1,256 contributions

do you have solid assets, as in 401k, retirement, stocks, mutual funds... ?????? linda

Jun 19th 2012
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Janine Bodway (jbodway)
#4 ranked lender in Montana - 42 contributions

Yes, you will have to account for all of your outstanding debts in order to qualify, which includes the land plus the taxes. However, a full application and review is really important to determine the structure of the file. There are options, as others have mentioned with particular Niche' Lenders that allow higher Debt to Income ratios than some, non-occupied Co-Borrower's and perhaps review of your current debts to see if consolidating is an option.I would also suggest a professional review of your income to be sure appropriate numbers are being utilized where they can. I suggest finding a Loan Originator that you trust and can establish a rapport with and work together to find out what is needed to qualify for this program or perhaps an alternative program. I do have options so feel free to contact me anytime and I am located here in MT. jbodway@acceptancecapital.com 406-270-7282

Jun 19th 2012
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

All debt must be included and FHA allows for higher debt to income ratios so you might be okay. You definitely need to speak with a mortgage broker to help you find a lender that allows high debt to income ratios. If you would like to discuss more give me a call at 201-962-3555. Michelle

Jun 19th 2012
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,821 contributions

First and foremost, Do NOT be tempted by anyone to not disclose that you have the land and a loan on it. Your lender WILL find out about it and if you have not disclosed it on your application, decline you. They could also turn you over to the authorities for attempting fraud. It's just not worth it. Will it impact your ability to qualify? Maybe, but the best way to find out is to work with a local Mortgage Banker/Broker. We have access to many investors/lenders and can get deals done that the big banks can't or won't. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com ~ 888-889-9950

Jun 19th 2012
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