Articles Published in: 2017

Is U.S. Citizenship Required For An FHA One-Time Close Construction Loan?

November 13, 2017

FHA One-Time Close Construction Loan Rules: Utilities

FHA loan rules for One-Time Close / Single-Close construction loans include a set of requirements the finished property, which must meet both state/local building code and FHA loan minimum property standards. Those FHA standards include a set of requirements for access, utilities, and water quality which must be met as a condition of loan approval. It’s surprising to some FHA loan applicants that certain features of a new construction home are A) regulated and/or B) allow things like septic tanks or wells. But not all properties are the same, and some construction issues are present in some housing markets that aren’t a consideration elsewhere. Well water is a great example. When a resident of a large metropolitan areas thinks of a new construction home, it’s likely that issues surrounding wells | more...

November 10, 2017

FHA Loan Debt-To-Income Ratios Part Two

By Bruce Reichstein

What is the debt-to- income ratio (DTI) for an FHA loan? We answered that question in a previous blog post, discussing the FHA loan rules for loan approval where loan affordability is concerned. In general, FICO scores and debt ratios are reviewed together. You may have a debt ratio that comes close to or exceeds the general standard for these limits, but compensating factors may apply to help the lender justify approving your home loan. What are these factors? FHA Loan Compensating Factors For Higher Debt-To-Income Ratios FICO scores play an important part in determining who must have compensating factors for a high DTI. As the FHA loan handbook states, borrowers who meet the FHA loan FICO score requirement for maximum financing (580 or above) can have a debt to | more...

November 10, 2017

What Is The Debt-To-Income Ratio For An FHA Loan?

By Joe Wallace

What is the debt-to- income ratio for an FHA loan? Simply put, it’s the amount of income you have compared to the amount of money you must pay each month on your financial obligations. The debt-to-income ratio (DTI) is an important part of the lender’s calculations that determine whether or not you will be approved for the mortgage loan. Debt-To-Income Ratio Calculations For FHA Loans There are two kinds of debt-to-income ratio calculations. One is made with the borrower’s current income and debts, the other is made with those factors plus the amount of the projected monthly mortgage payment. If you aren’t sure whether you can afford a mortgage loan or not, the second ration will tell you what percentage of your pay will be taken up by your monthly | more...

November 9, 2017

Does The FHA Have An Inspection Checklist?

By Bruce Reichstein

Does FHA have an inspection checklist? The question is a popular one, but it reveals a common misconception about the nature of FHA appraisals. It is one that’s extremely important to clarify-the FHA appraisal is NOT a home inspection and shouldn’t be considered one. The FHA Appraisal Is A Tool For The Lender, Not The Borrower In spite of the fact that an FHA appraiser is required to insure the property to be purchased with an FHA home loan meets minimum standards, the real usefulness of the appraisal is NOT for the borrower. The lender uses the appraisal to determine the fair market value of the home and that purpose should be considered its’ primary end result. That means the FHA appraisal is NOT a stamp of FHA approval, or | more...

November 9, 2017

HUD Makes Disaster Relief Available For California Wildfire Victims

By Joe Wallace

The Department of Housing and Urban Development has announced disaster relief for victims of California wildfires, following a presidential declaration of federal disaster areas in the state. According to a press release published on the HUD/FHA official site, “HUD will speed federal disaster assistance to the State of California and provide support to homeowners and low-income renters forced from their homes due to wildfires” in the counties affected by the major disaster declaration. Those counties include: Butte Lake Mendocino Napa Nevada Orange Sonoma Yuba Those in federally declared disaster areas are eligible for a variety of measures from the FHA and HUD including FHA loan foreclosure relief in the form of a 90-day moratorium for all FHA mortgage foreclosure actions in the affected areas. Home owners may also be eligible | more...

Home Buying, FHA Loans, And Mortgage Trends

November 8, 2017

Can I Get An FHA Loan Without A Down Payment?

By Bruce Reichstein

Can I get an FHA loan without a down payment? That’s a question some ask after learning that some conventional mortgages require a minimum of 10% down, sometimes as high as 20% down. Is there such a thing as a no-money-down FHA mortgage loan? Down Payment Rules For FHA New Purchase Loans and Construction Loans All FHA forward mortgages (what you apply for to purchase a home) require a minimum down payment of 3.5% of the adjusted value of the property. There is one exception, and that is for FHA 203(h) rehab loans for disaster victims in federally declared disaster areas. The FHA 203(h) rehab loan requires NO down payment UNLESS it is used in conjunction with an FHA 203(k) rehab loan (which is for general use and not limited | more...

November 8, 2017

FHA and HUD Announce Extended Foreclosure Relief For Hurricane Victims

By Joe Wallace

The FHA and HUD have announced extended foreclosure relief for victims of recent hurricanes. According to the FHA/HUD official site, those in federally declared disaster areas created by Hurricane Irma, Hurricane Harvey, and Hurricane Maria will have time added to the original 90-day foreclosure moratorium. According to the HUD press release, “FHA is extending this foreclosure relief in Presidentially declared counties and municipalities where the Federal Emergency Management Agency (FEMA) is operating its Individual Assistance Program.” “Under the expanded moratorium, FHA is instructing lenders and servicers to suspend all foreclosure actions against borrowers until the following dates: Hurricane Harvey – February 21, 2018 Hurricane Irma – March 9, 2018 Hurricane Maria – March 19, 2018” Who Qualifies For Extended Foreclosure Relief? According to HUD, those with FHA-insured mortgages qualify for | more...

November 7, 2017

Why Do I Have To Pay For Mortgage Insurance On An FHA Loan?

By Bruce Reichstein

Why do I have to pay for mortgage insurance on an FHA loan? Borrowers who are used to the terms and conditions of conventional mortgages will know that (depending on the lender) without a substantial down payment, conventional loans require private mortgage insurance (PMI) to protect the lender in case of loan default. FHA mortgages also require loan insurance, but not through a private company. Instead, the FHA requires the borrower to pay a mortgage insurance premium as part of their monthly mortgage payment, and also an Up Front Mortgage Insurance Premium (UFMIP) at loan closing time. It’s easy to get Private Mortgage Insurance (PMI) confused with the FHA’s Mortgage Insurance Premiums (MIP) but they are not the same and FHA mortgage insurance is handled differently and has different requirements | more...

November 7, 2017

HUD Takes Measures To Speed Up Hurricane Recovery Efforts

By Joe Wallace

HUD has announced it is taking measures to speed up hurricane recovery efforts through a series of red tape-cutting waivers that affect regulatory and administrative procedures. According to a press release on the official site, a set of 19 waivers have been created, intended to help communities “to accelerate their recovery from Hurricanes Harvey, Irma and Maria. While HUD granted a number of individual waivers following disasters in the past, today’s announcement represents one of the largest collections of regulatory and administrative waivers ever issued by the Department at one time” according to the HUD official site. A variety of programs are affected by these new waivers. They include: The Community Development Block Grant (CDBG) Program HOME Investment Partnerships (HOME) Program Housing Opportunities for Persons with AIDS (HOPWA) Program Emergency | more...

November 6, 2017

Why Do People Prefer FHA loans? Part Two

By Joe Wallace

Why do people prefer FHA loans? That’s a question we’ve been examining recently. In a recent blog post we discussed FHA loan down payments, credit requirements, and related issues-all reasons people might turn to an FHA mortgage instead of a different kind of home loan. But there are other reasons to think about FHA mortgages, reasons that aren’t as as top-of-mind as what kind of down payment you might need. Consider the consumer protections and benefits built in to FHA mortgages that make these loans attractive. FHA Loans Permit Early Payoff Of The Mortgage Without Penalty The FHA lender handbook, HUD 4000.1, states that the borrower cannot be penalized for early payoff of the mortgage. In a section covering pre-payment of FHA loans, “pre-payment” is defined as follows: “A Partial | more...