1. Debt-to-Income Ratio:
The borrower’s debt-to-income ratio must be no greater than 43% of their gross monthly income.
2. Credit Score:
Borrowers must have a minimum credit score of 580 for FHA loans and 620 for conventional loans to qualify for spot approval.
3. Income Verification:
Lenders will need documents that provide proof of the borrower’s income and employment history such as pay stubs, W2 forms, tax returns, and bank statements.
4. Asset Statements:
The lender needs to verify all assets associated with the loan including cash reserves, retirement accounts, investments, or other financial assets like stocks and bonds.
An appraisal from an FHA-approved appraiser is required to qualify for spot approval. The appraiser’s report must include a detailed analysis of the property’s value and condition.
6. Home Inspection:
A professional home inspection is also required for FHA Spot Approval. This inspection will verify the condition of the property and provide a thorough assessment of any potential risks or defects that may affect the value of the home.
7. Other Documentation:
Lenders might also need additional documentation such as copies of bank statements, tax returns, title searches, insurance documents, and more to fully evaluate a borrower's application for FHA spot approval.