FHA Underwriter

An FHA underwriter works for a lender who offers mortgages to individuals. The underwriter looks at mortgage applications that might be eligible for insurance by the Federal Housing Administration (FHA). The FHA does not actually issue mortgage loans, but it does provide insurance for certain mortgages that might be at risk of default. In order to help the mortgage lenders feel more secure about these loans, the FHA offers insurance in case of default.

What an FHA Underwriter Does

The FHA provides a set of guidelines regarding mortgages that qualify for FHA underwriting. After a loan processor has reviewed the mortgage application and okayed it, the FHA underwriter will evaluate it against the FHA guidelines to determine the mortgage's eligibility.

An FHA underwriter is not employed by the FHA, but instead works with individual mortgage lenders and mortgage lending companies. Some specific information considered includes:

- Source of sources of the downpayment and closing cost funds
- Debt to income ratio of the applicant
- Overall amount required for fees and closing costs

If the mortgage meets the FHA guidelines, the underwriter will make a recommendation to the lender to extend the mortgage.

What Kinds of Mortgages Does an FHA Underwriter Review?

FHA insurance is typically extended for mortgage applicants who do not meet the requirements of a private lender. These can include applicants with:

- A past bankruptcy claim
- A lower credit score
- High existing debt

FHA insurance also can help first-time homebuyers who have not built up extensive credit yet or people wishing to refinance. In cases of refinancing, the original mortgage does not have to have been insured by FHA.

Underwriters receive special education regarding the FHA requirements, and must remain aware of changes in these requirements. Some requirements for FHA loans are the same throughout the US, but others are specific to the state in which the mortgage is secured. The underwriter must know the guidelines of the individual state in addition to knowing the Federal guidelines. The underwriter must also be able to supply an explanation as to why a loan has been declined.