Compensating Factors

• FICO score of 660 or higher for any applicants.

• No or low payment shock: minimal increase in housing expenses, or current rent is comparable to proposed PITI (100% increase in payment or less).

• Conservative attitude toward the use of credit and ability to accumulate savings

• Previous credit history verifies that applicant has the ability to devote a greater portion of income to housing expense. Many low income or high cost area applicants already pay a substantial amount for rent or housing and are successful.

• Employment history: Two or more years in current position is excellent, however underwriters should consider applicants who change positions frequently to better their financial position. Underwriters should give more credence to a history of continuous employment, (no gaps due to multiple terminations, etc.).

• Additional compensation/income: Public benefits, food stamps, potential commissions, bonus payouts, and additional part time employment that lacks a stable history may not be reflected in the repayment income, yet this additional income will have a direct effect on the ability to successfully repay the mortgage obligation.

• Cash reserves available post closing.

• Potential for increased earnings and career advancement, as indicated by job training or education in the applicant’s profession.

• Trailing spouse income: Home is being purchased as the result of relocation of the primary wage-earner. The secondary wage earner has an established history of employment and is currently seeking or expects to return to work and there are reasonable prospects for securing employment in a similar occupation within the new area.

• Low TD: A low TD by itself does not compensate for a high PITI ratio, however when other strong compensating factors are present a low TD ratio should be viewed as a positive mitigating factor.