This is not a chatbot. Every answer below is pulled from a versioned, indexed copy of the HUD Handbook 4000.1 and cited to the exact section. Loan officers get the answer and the reference — no manual lookup, no call to the underwriter for basic guideline questions. Response times under 2 seconds for 95% of queries.
What is the minimum credit score for FHA with 3.5% down payment?
Borrowers with a decision credit score of 580 or above are eligible for maximum financing (96.5% LTV / 3.5% down payment). Borrowers with decision credit scores between 500 and 579 are limited to 90% LTV (10% down payment). Borrowers with credit scores below 500 are not eligible for FHA-insured financing.
Can rental income from a recently purchased property be used to qualify for FHA?
Rental income from a recently acquired property is generally not eligible for FHA qualification unless the borrower has a documented two-year history of property management on their tax returns. An exception exists for borrowers relocating where the departing primary residence becomes a rental — specific documentation of the relocation and lease agreement is required.
What documentation is required for self-employment income on an FHA loan?
Self-employed borrowers must provide: (1) two years of signed personal tax returns with all schedules, (2) two years of signed business tax returns for each business (1065, 1120S, or Schedule C), (3) a year-to-date profit and loss statement, and (4) evidence the business has been in operation for at least two years. Income is calculated using the two-year average, with depreciation, depletion, and amortization added back. If income is declining year over year, the lower year is used instead of the average.
Can VA disability income be grossed up for FHA qualification?
Yes. Non-taxable income including VA disability benefits may be grossed up by 15% for FHA loans — not 25%, which is a common error. FHA uses a different gross-up factor than conventional. The grossed-up amount is used for DTI calculation. Documentation required: VA benefit verification letter showing amount and continuance. Important: the gross-up applies to the qualifying DTI ratio but does NOT apply to VA residual income calculations if the borrower is also using VA benefits.
What are the FHA rules for boarder income?
Per Mortgagee Letter 2025-04 (effective March 2025), boarder income may be used for FHA qualification under these conditions: (1) borrower must document receipt of boarder income for at least 9 of the most recent 12 months, (2) income is calculated using the 12-month average of documented payments, (3) boarder income may not exceed 30% of the borrower's total qualifying income, (4) a signed boarder agreement and evidence of shared residency are required.
Automatic Model Selection by Query Complexity
Haiku
Simple Factual Lookups
Credit score minimums, LTV limits, fixed thresholds. Questions with a single definitive answer in the guidelines.
$0.0008 / 1K tokens • under 1 second
Sonnet
Complex Interpretation
Income calculation rules, eligibility edge cases, multi-condition scenarios, recent Mortgagee Letter updates, cross-agency comparisons.
$0.003 / 1K tokens • 1–2 seconds
Opus
Novel Scenarios & Conflict Resolution
Cross-agency comparison (FHA vs. VA vs. USDA), conflicting guideline interpretations, scenarios with no clear precedent.
$0.015 / 1K tokens • 2–3 seconds
Routing safety net: Routing is based on query complexity classification using keyword matching and question structure analysis. If Haiku returns a low-confidence answer (<80%), the query is automatically escalated to Sonnet. No answer is silently degraded.
Guidelines Are Versioned. Every Answer Is Dated.
Version-tagged source documents — all guidelines are stored with effective dates. Mortgagee Letters are tracked separately and layered on top of the base handbook.
Daily automated update check — system diffs indexed content against source URLs every 24 hours. Changes trigger immediate cache invalidation and re-indexing.
7-day update indicator — if the underlying guideline was updated in the last 7 days, every answer surfaced from that section displays a visible freshness warning.
Cache TTL: 24 hours for answers — immediate invalidation on any detected guideline update. LOs are never served stale answers without a clear indicator.
Every answer displays the effective date of the guidelines it was drawn from, so LOs can reference the same version in their loan file.
Based on guidelines effective March 15, 2025 — HUD Handbook 4000.1 + ML 2025-04
Based on guidelines effective March 20, 2026 — Updated 3 days ago
Guidelines recently updated