Articles Published in: 2017

October 2, 2017

What Are The FHA Loan Credit Score Rules?

What are the FHA loan credit score rules? Do you know the difference between FHA loan standards and lender standards? First time home buyers should know what the rules are long before starting the search for a new home. FHA Loan Credit Score Standards FHA home loans require a FICO score minimum of 580 or better to qualify for the lowest down payment of 3.5%. FICO scores are not the only criteria for approving or denying the home loan, so if you know your FICO score but aren’t sure about the rest of the financial qualifications for FHA loan approval, you’ll definitely want to keep reading. Lender Credit Score Standards Lender FICO score standards can be (and often are) higher than FHA loan minimum requirements. That means that even though | more...

Conventional Loan Interest Rates Make History, FHA Loan Rates Still Incredibly Low

October 2, 2017

Credit Score Issues and FHA Loans

By Bruce Reichstein

Do you know how credit score issues affect your FHA home loan application? For most borrowers, there’s no such thing as a new purchase loan with no credit check; The FHA loan handbook (HUD 4000.1) instructs the lender that credit score checks for FHA mortgage loan applications are mandatory except in certain instances such as for FHA Streamline Refinance loans, and other transactions as described on page 158: “The Mortgagee must review the credit report to determine the Borrower’s Minimum Decision Credit Score (MDCS), except for Mortgages to be insured under Section 247, Section 248, Streamline Refinances, and Assumptions. The MDCS will be used to determine the maximum insured financing available to a Borrower with traditional credit.” HUD 4000.1 adds that FHA loan applicants who have non-traditional or insufficient credit | more...

What Credit Score Is Needed For An FHA Mortgage?

September 29, 2017

FHA Loans, Income Verification, And Rental Income (Part Two)

By Joe Wallace

In our last blog post, we discussed some basic FHA loan rules about using rental income to qualify for an FHA mortgage loan. Some borrowers are interested in purchasing a multi-unit property that they intend to live in as their primary residence, with the goal of renting out unused living units. FHA loan rules permit this only when the borrower lives in the property; you cannot plan to be an absentee landlord and expect FHA loan approval. In our last blog post, we wrote: “It is reasonable to expect that such a borrower would want to know if she could use projected rental income from that arrangement as ‘verifiable income’ for the purposes of loan approval. Can the borrower reasonably expect a lender to approve of income from this rental | more...

September 28, 2017

FHA Loans, Income Verification, And Rental Income From Other Properties (Part One)

By Bruce Reichstein

In a previous blog post, we discussed the issue of a borrower using projected rental income from the property to be purchased with an FHA mortgage. Some borrowers are interested in purchasing property that they intend to live in as their primary residence, while planning on renting out unused living units in a multi-unit property. It is reasonable to expect that such a borrower would want to know if she could use projected rental income from that arrangement as “verifiable income” for the purposes of loan approval. Can the borrower reasonably expect a lender to approve of income from this rental situation when calculating the borrower’s debt-to-income ratio? This is possible in situations that meet FHA loan approval; some scrutiny will be given to a borrower’s rental income history or | more...

September 28, 2017

Can I Get a Single Family FHA Loan For A Multi-Unit Home?

By Joe Wallace

Can I get an FHA single family loan for a multi-unit home? Some borrowers get confused by the wording in the name of the FHA Single Family Home Loan program. It’s easy to assume that FHA single family mortgages are for one-bedroom houses, but that is definitely not the case. FHA loans are approved for homes that feature as many as four living units-a four unit property can definitely be financed with an FHA loan assuming the borrower is qualified to be approved for the mortgage. One-to-four unit properties purchased with FHA mortgages must be the primary residence of the borrower-you must agree to occupy the home purchased with an FHA mortgage loan usually within approximately two months after loan closing (unless the borrower makes other arrangements with the lender | more...

September 27, 2017

What Are My FHA Loan Options For Buying A New Home?

By Joe Wallace

What are my FHA loan options for buying a new home? FHA loans are attractive to many house hunters thanks to lower down payment requirements, an credit standards that can be more forgiving than some conventional mortgages. The ability to freely sell the home or allow the FHA mortgage to be assumed (with lender participation) by someone else should the need arise is also a good, consumer-friendly feature. There are a few misconceptions about FHA home loans including the requirements to qualify and types of property available to be purchased with an FHA mortgage. Fortunately, some of those misconceptions have to do with things the borrower thinks cannot be done for some reason, but are actually options in the borrower’s favor. FHA Loans: Not Just For First Time Buyers FHA | more...

September 26, 2017

Can I Finance My FHA Loan Up Front Mortgage Insurance Premium?

By Bruce Reichstein

Can I finance my FHA loan Up Front Mortgage Insurance Premium (UFMIP)? And how does it affect my mortgage loan? These are questions many ask, unsure of whether FHA mortgage loan limits include the UFMIP and how they are allowed to pay. FHA Up Front Mortgage Insurance Premiums May Be Financed FHA loan rules in HUD 4000.1, the FHA loan handbook, state clearly that FHA UFMIP may be financed. It will be included in the final loan amount at closing time. UFMIP Must Be Financed Or Paid In Cash HUD 4000.1 instructs the lender to either collect the Up Front Mortgage Insurance Premium in cash at closing time, or have it included into the loan amount. However, the borrower must pay 100% either way-you cannot finance half the amount and | more...

September 26, 2017

How Does My Credit Score Affect My FHA Mortgage Loan?

By Joe Wallace

How does my credit score affect my FHA mortgage loan? There are several areas where FICO scores may affect how much a borrower pays including interest rates, down payment issues, and more. FHA Loan Credit Score Rules: Two Standards There are two basic sets of rules and requirements governing borrower credit scores. One set of rules is found in HUD 4000.1, and gives the FHA Single Family Home Loan program minimum requirements for credit scores and how they affect a borrower’s down payment requirements. The other set of rules and regulations are those of the individual participating lender. Your chosen lender may have higher standards than FHA minimums, and this is permitted by law as long as those higher standards conform to Fair Housing Act policies and other federal regulations. | more...

Rehab Refinance Loans, reverse mortgages

September 25, 2017

Which Debts Are Evaluated For My FHA Home Loan?

By Bruce Reichstein

Which of my debts are evaluated for an FHA home loan? Borrowers sometimes get nervous about this issue, especially if they are concerned about carrying too much debt to qualify for a home loan. FHA loan rules governing how a borrower’s debt load must be reviewed by the lender are found in HUD 4000.1. One section titled “General Liabilities and Debts” states: “The Mortgagee must determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation.” The basic answer to the question may depend on whether the lender is manually underwriting the mortgage loan or using the TOTAL system to evaluate the application. TOTAL is an “automatic” underwriting tool, and when using this tool, the lender is instructed as | more...

September 25, 2017

HUD Announces Further Disaster Relief For U.S. Virgin Islands

By Joe Wallace

The Department of Housing and Urban Development has announced disaster relief for St. Croix Island, the latest of the U.S. Virgin Islands to be declared a major federal disaster area. There have been a string of announcements for areas in Puerto Rico and elsewhere as the damage has been surveyed and, in some cases, when additional concerns are raised by new tropical storms and hurricanes. St. Croix is now able to receive federal disaster assistance from FEMA, HUD, and the FHA among other agencies. Home owners in presidentially-declared major disaster areas should contact FEMA as soon as possible to determine what benefits and relief are available to them. Those who own property damaged in the natural disaster should contact their lenders and insurance agents to determine next steps in recovery, | more...