An FHA Loan vs. a FHA 203(k) loan

January 11, 2018

 

From a guideline perspective there isn't that much of a difference between a typical FHA loan and an FHA 203(k). 

 

The guidelines surrounding income and assets are the same.  There will be no difference for how income is calculated between the two products. All rules on commission, bonus, overtime, and being self-employed do not change.  Similarly, for assets, the rules on where gift funds can come from and the sourcing of bank statements remain.  

 

There are some differences in terms of qualifying credit scores and qualifying debt-to-income (DTI) ratios.

 

For a loan that is under the Conforming balance the Max DTI is 55% and the minimum credit score is 620. 

 

If you are in a county where your FHA loan limit is above the Conforming limit and you are seeking a 203(k) loan above the Conforming amount.  Your max DTI will be 50% and will need a minimum credit score of 640.

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