FHA to consider positive rental history in mortgage eligibility

The Federal Housing Administration will permit the inclusion of a first-time homebuyer’s positive rental payment history as an additional factor in determining eligibility for an FHA-insured mortgage.

By adding a positive rental history indicator to the Technology Open to Approved Lenders mortgage scorecard, FHA’s credit evaluation will become more comprehensive and equitable, the agency said in today’s announcement, with the goal of enabling additional first-time homebuyers to qualify for affordable FHA-insured mortgage financing.

In its new policy, FHA considers positive rental payment history as the on-time payment of all rental payments in the previous 12 months. Lenders originating forward-purchase mortgages for FHA insurance will be required to obtain verification of the borrower’s on-time rental payments and indicate via a new indicator within the scorecard the submission of a positive rental payment history for the borrower.

Lenders may begin indicating a borrower’s positive rental payment history in the TOTAL mortgage scorecard for scoring events beginning on Oct. 30, 2022, and for case numbers assigned on or after Sept. 20, 2021. The agency provided a guidance document.