Articles Published in: April 2014

April 7, 2014

FHA Loan Reader Questions: Building Code and FHA Minimum Property Requirements

A reader asks, “I have a front porch that is 40 feet long and 12 feet wide and is about 3 1/2 to 4 feet high, would FHA require banisters around this porch? It has steps with railings on each side to come onto the porch…” The main problem with addressing specific appraisal questions like this is that FHA loan rules do have some general guidelines (as well as more specific ones in some cases) but the FHA minimum property requirements are not the only rules that must be complied with in order for a home to pass the FHA appraisal. Federal, state, and local building code requirements may also apply, and the property that is not in compliance with these requirements may need corrections or repairs before the FHA | more...

April 4, 2014

FHA Loans After A Short Sale: A Reader Question

By Joe Wallace

A reader asks, “Is there a time limit on getting a FHA loan after a short sale if you have stayed current on the mortgage payments?” FHA loans following a short sale are possible, but the timing of the loan application may play a part in whether the loan is approved. For borrowers who were not current on the mortgage at the time the short sale occurred, a mandatory waiting time known as a “seasoning period” will apply. The FHA Loan rulebook, HUD 4155.1, says “A borrower is considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage, all • mortgage payments on the prior mortgage were made within the month due for the 12-month period preceding the short sale, and • | more...

April 4, 2014

FHA Loan Reader Questions: FHA Mortgage Loan Interest Rates

By Joe Wallace

A reader asks, “Is there a current guideline for the expected interest rate under the short refi for a home 450k to 500k. My note holder indicated approx 5% interest, 6.5 APR which seems a little high given the current rates for Jumbos.” “Also, for those interested should note my Tax Rep indicated the “forgiven debt” is no longer tax exempt (meaning the next year they amount forgiven would be taxed at you income+forgiven debt level). Have you heard if the Fed is talking about re-instating? This could be a substantial one time out of pocket tax owed the next year.” The first part of this reader question would seem to imply to some that the FHA might regulate or set interest rates. But that’s a misconception almost as common | more...

April 3, 2014

FHA Loan Reader Questions: Bankruptcy Waiting Times

By Joe Wallace

A reader asks, “I was pre-approved for a FHA loan in February and now that I have made an offer on a house, the loan company is saying I have to wait three years after my bankruptcy to qualify. Can you give me the length of time I have to wait for a FHA loan?” FHA loan rules for mandatory waiting periods after a bankruptcy depend on a variety of factors including the type of bankruptcy. In some cases a borrower may need the court’s permission to enter into a new loan agreement, and in others there may be no choice but to wait out the minimum required time. But the most important thing to understand about FHA loan bankruptcy requirements is that as long as the lender observes the | more...

April 2, 2014

FHA Loan Reader Questions: “Low Income” Loans For Modular Housing/Mobile Homes

By Joe Wallace

A reader asks, “I am on disability and receive a fixed income of 788.00 monthly. I would love to be able to get a loan for a mobile or modular home. Can I be qualified for a low-income loan?” Single-family FHA loans don’t have income requirements in terms of minimum or maximum incomes per se. It’s a common misconception that you must earn a minimum amount of money or NOT earn too much money to qualify for an FHA mortgage. But if there are no minimums and no maximums, how do participating FHA lenders determine who qualifies for an FHA single-family home loan? The borrower’s income and monthly obligations are analyzed to see if the borrower can afford the loan. If a borrower’s debt-to-income ratio is within the right tolerances | more...

April 1, 2014

FHA Loan Reader Questions: Credit Scores and Down Payments

By Joe Wallace

A reader asks, “If my credit score is a 630 and were first time homebuyers can we qualify? And would a downpayment help?” The FHA loan FICO score requirement may vary from lender to lender, but in general a score above 620 may be very helpful when it comes to getting an FHA mortgage loan approved. However, this reader question raises an issue–a popular misconception about FHA mortgages–that’s important to address. FHA mortgage loans don’t require the applicant to be a first time home buyer. With that in mind the borrower should also know that there’s no “advantage” to being a first time home buyer when it’s time to apply for the FHA mortgage. That does not mean there aren’t home buyer assistance programs, pre-purchase counseling, or other programs available | more...