Question 1

Can an FHA loan be manually underwritten?

Accepted Answer

Yes. Certain FHA loans that do not receive an automated approval may be evaluated through manual underwriting when the borrower and loan meet applicable requirements.

Question 2

Is Refer Eligible the same as a denial?

Accepted Answer

No. A Refer recommendation is not an approval, but it is not always a final denial. The file may require manual review, corrected information, additional documentation, or a different loan structure.

Question 3

What is the maximum DTI for FHA manual underwriting?

Accepted Answer

The maximum depends on the borrower’s profile and documented compensating factors. Common benchmarks range from 31 percent housing and 43 percent total debt to as high as 40 percent housing and 50 percent total debt.

Question 4

Can FHA approve a borrower with a 50 percent DTI?

Accepted Answer

Potentially. A manually underwritten FHA loan may permit a total debt ratio as high as 50 percent when the required compensating factors are documented. Approval is not guaranteed.

Question 5

What are FHA compensating factors?

Accepted Answer

Potential compensating factors include verified reserves, minimal payment shock, no discretionary debt, qualifying residual income, and documented additional income not used directly for qualification.

Question 6

Do all FHA lenders offer manual underwriting?

Accepted Answer

No. Some lenders do not accept manually underwritten loans or impose requirements that are more restrictive than FHA’s baseline guidelines.

Question 7

Does manual underwriting take longer?

Accepted Answer

It can. Manual underwriting often requires additional documents, explanations, and human review.

Question 8

Can rental history help with FHA manual underwriting?

Accepted Answer

Yes. A verified history of making rent payments on time can demonstrate the borrower’s ability and willingness to manage a housing obligation.

Question 9

Can a borrower qualify while living rent-free?

Accepted Answer

Potentially. However, the underwriter may need to consider greater payment shock because the borrower has not recently managed a comparable housing payment.

Question 10

Is manual underwriting guaranteed after an automated denial?

Accepted Answer

No. Not every file is eligible for manual underwriting, and the borrower must still meet FHA and lender requirements.

Question 11

Can The Herd Lending review an FHA Refer result?

Accepted Answer

Yes. The Herd Lending can review the borrower’s documentation, proposed payment, possible compensating factors, and available underwriting paths. A review does not guarantee approval.

Day: August 4, 2026

FHA Manual Underwriting Guidelines