Articles Published in: January 2016

January 29, 2016

FHA Mortgage Loan Limits For New Purchase Loans And Refinance Loans

We’ve gotten some questions recently about FHA mortgage loan amounts, so it seemed like a good time to post the FHA loan rules found in HUD 4000.1 about how maximum loan amounts are calculated. There are FHA loan guaranty limits and FHA mortgage loan amounts–the two shouldn’t be confused as FHA mortgage loan guaranty limits refer to the amount of money the FHA will guarantee for the loan, whereas the maximum loan amount is the highest amount for a specific transaction that the lender/FHA loan rules will allow. FHA loan rules say the maximum can be affected by the type of transaction. You can find the FHA maximum guaranty amounts for your housing market at the FHA official site: https://entp.hud.gov/idapp/html/hicostlook.cfm. HUD 4000.1 says of maximum loan amounts: “A Mortgage that | more...

January 29, 2016

FHA Announces New Insurance Rate Cuts For Multi-Family Loans

By Joe Wallace

The FHA has issued a press release announcing an insurance rate cut for FHA insured multi-family home loans. According to HUDNo.16-008, “In an effort to help preserve and increase the amount of affordable, quality rental housing across the country, the Federal Housing Administration (FHA) today announced a multifamily insurance rate reduction designed to encourage capital financing of affordable and energy-efficient apartments.” The rate reductions announced in the press release are scheduled to take effect on April 1, 2016, and according to the FHA officials site, “directly impact FHAs Multifamily Housing Programs and properties housing low- and moderate-income families and/or developments installing energy-efficient systems or building within federal energy guidelines.” The press release also adds, “U.S. Housing and Urban Development (HUD) Secretary Julin Castro made the announcement today during a visit | more...

January 28, 2016

FHA Loan Questions: Maximum FHA Loan Amounts For Building A Home

By Joe Wallace

A reader asked us a question recently in the comments section about FHA new construction loans: “My husband and I will be building a home, we have land that we are interested in, what is the max for a construction loan and build that FHA gives?” To be clear, the FHA itself does not issue loans–the borrower must find a participating FHA lender willing to offer a new construction loan. When it comes time to determine the maximum loan amount for new construction mortgages, the FHA loan rulebook has specific instructions for the loan officer. How does the FHA instruct lenders to determine the maximum mortgage amount in these cases? According to HUD 4000.1: “The maximum mortgage amount is calculated using the appropriate purchase Loan-to- Value (LTV) percentage of the | more...

January 28, 2016

Mortgage Rate Trends: Holding Firm After Fed

By Joe Wallace

Wednesday was a potentially big day for mortgage loan rates–the Fed issued a scheduled announcement that had plenty of eyes on it even though it would seem unlikely for any major news to come from that direction since the Fed announced a hike in mortgage rates at the end of last year. But investor reaction is a funny thing, so there was plenty of attention on the Fed, seemingly “just in case”. Rates were trending a bit higher in the morning according to our sources, but after the Fed announcement we saw rates headed right back to yesterday’s territory. That means 30-year fixed rate conventional mortgages ended the day, best execution, at a range between 3.75% and 3.875%. FHA mortgage loan rates remain in the best execution comfort zone of | more...

January 27, 2016

FHA Condo Loans: Finding a Condo Project On The Approved List

By Joe Wallace

FHA mortgage loans aren’t just for suburban homes. You can use an FHA mortgage to buy a manufactured home, a townhouse, or a condominium unit. When it comes to FHA condo loans, there are some additional rules and requirements in place to protect the borrower and to insure the condo units purchased with FHA mortgages don’t place restrictions on the borrower in terms of occupying or selling the property. That is one reason why the FHA requires all loans for condos to be for units found in projects on an FHA approval list. If a condo project is on the list already, the sale can go through just like any other type of FHA mortgage. But if the condo project is not on the FHA approved list, it must be | more...

What if my home was damaged in a natural disaster?

January 27, 2016

FHA 203(k) Rehab Loans: A Reader Question

By Joe Wallace

Recently a reader asked us a question in the comments section about using FHA loans to purchase property to be converted into a residence. “There is an old church for sale near us that we would love to buy and make into a home. Can this be done using an FHA loan? We plan on only using it for residential use. Its been hard to find a home that we love and that falls into FHA standards.” The answer to this question depends greatly on whether or not the property to be purchased is, in the eyes of the FHA, a one-to-four unit property. FHA loans include something known as a 203(k) Rehabilitation loan, which can be used to rehab, refurbish or repair an existing property. According to HUD 4000.1, | more...

January 26, 2016

FHA Condo Loans: Basics You Need To Know

By Joe Wallace

FHA loans for condo projects are possible according to the FHA official site, but the condo unit you want to purchase must be on, or added to, the FHA approved condo project list. There’s a very good reason why FHA requires a condo project to be approved–some condo projects have restrictions that are not permitted under FHA rules–such as any agreement that restricts the borrower’s ability to occupy the property once purchased, or freely dispose or sell the property as the borrower sees fit. What does the FHA official site have to say about condo loans in general? “Section 203 (b) of the National Housing Act provides authority to insure any mortgage covering a one-family unit in a project coupled with an undivided interest in the common areas and facilities | more...

January 26, 2016

Mortgage Rate Trends: Recovering Friday’s Losses

By Joe Wallace

Mortgage rates made some gains on Monday, taking back some (but not all) of the losses incurred on Friday. Stock market woes are given credit for some of the gains, but oil prices also played a role. It’s likely that as long as this up-and-down situation happens between stocks and oil, those two factors will have at least a small influence depending on the day and investor reaction to developments or breaking news in those areas. Some sources believe that as long as oil prices remain low or continue to move lower, there could be good news for mortgage rates in the short term. 30-year fixed rate conventional mortgages are in a best-execution range at the time of this writing between 3.75% and 3.85% though some may find 4.0% still | more...

January 25, 2016

FHA Loan Income Questions: Pay Stubs and W-2s

By Joe Wallace

A reader got in touch with us recently to ask a question about FHA loan income requirements. We got the following question in the comments section: “My husband works as a mechanic and gets paid cash so he doesnt really have a proof of income or the last 2 yrs or w2 and has an OK credit score and we are trying to get a FHA loan to buy a house..what do we need to do to be able to qualify?” This is an important issue, especially for self-employed people. The bottom line is that the participating FHA lender is required by FHA loan regulations to obtain proof of income in some way. This proof is needed so the lender can verify the income and insure that it is likely | more...

January 25, 2016

Mortgage Rate Trends: Higher On Friday

By Joe Wallace

After some good improvements last week, Friday came to undo some of that progress. Earlier in the week mortgage loan rates were solidly in the high three percent zone, but after Friday’s upward turn, we see four percent back in the picture. 30-year fixed rate conventional mortgage loan rates were in a range on Friday between 3.875% and 4.0%, best execution. FHA mortgage rates are still being reported, best execution, at 3.5% but if the upward trend continues this week we could see that number shift into a range of rates with 3.5% at the low end, or we could just see FHA mortgage loan interest rates shift back into the previously long-held 3.75% (best execution). (As always, it’s important to remember that best execution rates are not available to | more...