At North Star Mortgage Network, we know that not every borrower fits inside a box. That’s why we work with clients who need FHA Manual Underwriting. If your loan doesn’t get approved by the automated system, we don’t stop there — we dig in and look at the full picture.

What Is FHA Manual Underwriting?

FHA Manual Underwriting happens when a computer system (called Total Scorecard) can’t approve your loan. This may be due to:

• A “Refer” result from the system
• Past credit issues like bankruptcy or foreclosure
• A short credit history or no credit score
• Disputed accounts over $1,000
• Recent late payments
• Declining income if self-employed

We don’t rely on computers alone. Our team reviews everything carefully and helps you build a strong file.

FHA Manual Underwriting Credit Rules

Manual underwriting puts extra focus on credit history. Here’s what’s usually required:

• No 30-day late mortgage or installment payments in the past 12 months
• No more than two 30-day lates in the past 24 months
• No 90-day lates on credit cards in the past 12 months

We may also need “compensating factors” like savings, extra income, or a strong rental history to help get the loan approved.

Debt and Liability Review

When a loan is manually underwritten, we take a closer look at all your debts. Key rules include:

• Student loans: Use 0.5% of the balance if the payment is missing
• Authorized user accounts: Exclude only if the main borrower made payments for 12 months
• Child support and alimony: Use the higher of the court order or paystub amount
• Collections under $2,000: Often excluded with good documentation
• Charge-offs: Usually excluded if explained and documented

We also check if you’re responsible for any co-signed or business debts.

Waiting Periods for Credit Events

You can still qualify after a financial hardship, but FHA has waiting periods:

• Chapter 7 Bankruptcy: 2 years from discharge
• Chapter 13 Bankruptcy: 1 year with trustee approval
• Foreclosure or Deed-in-Lieu: 3 years from title transfer
• Short Sale: No wait if you made all payments on time before the sale
• Loan Modifications: Must show six on-time payments since the change

We’ll help you understand if you’re eligible — and how to prepare your file.

FHA Reserve Requirements

FHA requires some savings, called reserves:

• 1-2 Units: 1 month of total housing payment
• 3-4 Units: 3 months of total housing payment

Extra reserves may be needed if your debt-to-income (DTI) ratio is higher than normal.

What Makes North Star Mortgage Different?

We take time to review every detail. We help you write letters of explanation. We make sure you have what you need to qualify. With over 25 years of experience, we know how to handle tough files and manual underwriting.

We won’t give you the runaround. We’ll be honest, clear, and work hard for you every step of the way.

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