This document provides guidelines for qualifying borrowers for FHA and conventional loans based on their FICO score and debt-to-income (DTI) ratio. It outlines the basic requirements for borrowers between 620-639, 640-659, and 660+ FICO scores. For borrowers outside the standard DTI or payment shock limits, alternative qualifications include having two years of employment, two months of reserves, a front-end DTI of 31% or meeting the VA Residual Income Test. The document directs the user to exception requests or additional support for scenarios that do not meet requirements.

1. CBCMA Training
Series:
DTI and FICO
Flowchart

2. • My borrower is looking for an
FHA loan
• My borrower is looking for a
Fannie Mae conventional loan
What are my borrower’s basic requirements to qualify?
If you can’t move forward, it’s possible that your
borrower needs an exception request to qualify.

3. • What is my borrower’s FICO
range?
• 620–639
• 640–659
• 660+
Go Back
FHA DTI Ranges

4. • My borrower has… • A present housing payment
(verifiable 12 months or more)
• No present housing payment (or
less than 12 months verifiable)
Go Back
FHA: 620–639 FICO (Housing Payment Options)

5. • Requirements:
• Verification of twelve (12) months of
current housing expense required; a
traditional VOR is acceptable. If the
borrower rents from a relative or
individual (anyone other than an LLC
or management company), then
twelve (12) months of cancelled
checks or bank statements are
required to document payment
history. See section 5.17 for more
information
• HBE required
• Payment shock of 125% or less
• DTI of 45% or less
• But my borrower’s DTI is above
45% and is equal to or lower than
50%...
• But my borrower exceeds those
payment shock guidelines…
FHA: 620—639 (With Housing Payment)
Go Back

6. • Requirements:
• VOR documenting no housing
payment
• HBE required
• Maximum DTI 31% front-end and
45% backend; never to exceed
45% backend DTI
• Three (3) months PITI reserves
• Minimum two (2) years with
present employer
• Meet VA Residual Income
requirements
• There are no alternative
qualification guidelines for this
FICO band
• If your borrower does not meet
these requirements, your
borrower will need an exception
request to qualify
(exceptions@chenoafund.org)
FHA: 620–639 (No Housing Payment)
Go Back

7. • Requirements:
• Verification of amount of current
housing expense required (even if
borrower has no housing
payments); a payment history is
not required
• DTI of 50% or less
• But my borrower exceeds those
DTI requirements and has equal
to or lower than 55% DTI, and
AUS approves above 50%...
FHA: 640–659 FICO
Go Back

8. • Requirements:
• DTI ratio per AUS findings
FHA: 660+ FICO
Go Back
• There are no alternative
qualification guidelines for this
FICO band

9. • What is my borrower’s FICO
score range?
• 640–659
• 660+
Go Back
Conventional: DTI Ranges

10. • Requirements:
• DTI 50% or less
• But my borrower exceeds those
DTI requirements and has equal
to or lower than 55% DTI, and
AUS approves above 50%...
Go Back
Conventional: 640–659 FICO

11. • Requirements
• DTI per AUS findings
• There are no alternative
qualification guidelines for this
FICO band
Go Back
Conventional: 660+ FICO

12. For buyers above the DTI or payment shock limit, select one option from both categories:
• Two (2) years employed with the
current employer
OR
• Two (2) months PITI reserves
• A maximum DTI 31% front-end
OR
• Meets VA Residual Income Test
Go Back
You do not need to make an exception request for these requirements.
These requirements are in addition to the other requirements in your borrower’s
FICO band, except for the specific DTI or payment shock requirement being
excepted. Contact scenariodesk@chenoafund.org if you have questions.
Category 1 Category 2
Alternative Qualification Requirements