Guidelines for Mortgage Underwriting in Massachusetts

Conventional Loans

Underwriters considering a borrower for a conventional loan examine the borrower's gross monthly income and credit history. Underwriters also consider the borrower's revolving debt. To qualify for a conventional loan, the borrower's mortgage payments can't exceed 28 percent of his gross monthly income, and the borrower's total monthly debt can't exceed 36 percent of his gross monthly income. Borrowers typically need a down payment equal to at least 20 percent of the property's value.

For a Federal Housing Administration loan, underwriters expect the borrower to show two years of work or education history. Underwriters also consider the borrower's income, debt and credit history, although credit guidelines are more relaxed for these loans. To qualify for a Federal Housing Administration loan, the borrower's mortgage payment can be no more than 29 percent of his gross monthly income, and his total monthly debt can be no more than 43 percent of his gross monthly income. Federal Housing Administration loans require a down payment equal to at least 3 percent of the property value.

To qualify for a VA loan, applicants must have served in the military on active duty. Underwriters for VA loans consider the borrower's employment history, credit score, income and debt. The borrower's total monthly debts can't exceed 41 percent of his gross monthly income. However, if the borrower has a large down payment, underwriters might consider a higher debt-to-income ratio.

When considering a U.S. Department of Agriculture loan, underwriters analyze the borrower's credit score, gross monthly income and monthly debts. A borrower's mortgage payment can't exceed 29 percent of his gross monthly income, and the borrower's total monthly debt can't exceed 41 percent of his gross monthly income. The borrower's adjusted income can't exceed 115 percent of the adjusted income in the area surrounding the property.