Articles Published in: 2017

October 27, 2017

What Are The Lender Requirements For An FHA Loan?

What are the lender requirements for an FHA loan? The answer to that question varies depending on the lender, but in general there are many areas the lender will examine to determine if you are able to afford an FHA home loan. FHA Lender Requirements For Employment And Income The FHA loan handbook, HUD 4000.1, requires your chosen participating FHA lender to verify your most recent two years of employment history. Those two years do not have to be with the same employer, but the lender will be looking for patterns of reliability where income and employment are concerned. The lender wants to know that your current income is stable, reliable, and likely to continue. FHA loan rules provide for the fact that not all income is employment-based. You cannot | more...

What Credit Score Is Needed For An FHA Mortgage?

October 26, 2017

What Are The Property Requirements For An FHA Loan? Part Two

By Joe Wallace

What Are The Property Requirements For An FHA Loan? We’ve been examining that question in our last few blog posts. FHA loan rules specify that a home must meet minimum standards in order to be approved for an FHA mortgage. What are those standards? There are many, which is why a qualified FHA appraiser must review the property to make sure it is suitable for a mortgage. General Requirements FHA loan rules in HUD 4000.1 state that the home must be generally safe, habitable, and must have a remaining economic life for the entire duration of the mortgage. However, not all homes are in the same condition when they are sold as brand new houses and some homes are purchased under the FHA 203(k) or FHA 203(h) rehab loan programs. | more...

October 26, 2017

What Are The Property Requirements For An FHA Loan?

By Bruce Reichstein

What are the property requirements for an FHA loan? There are standards listed in the FHA loan handbook, HUD 4000.1, that all buyers should know. The ability to purchase a home with an FHA mortgage is determined by your credit rating, debt to income ratio, employment, and related factors. But the ability to purchase a specific home will also include standards for the property itself; standards which must be met by the home as-is, or brought into compliance as a condition of loan approval. Basic FHA Loan Property Requirements: Location According to HUD 4000.1, the home must be located within the continental United States, its’ protectorates or territories. A home is eligible to be considered for an FHA loan if it is located in one of the following areas listed | more...

October 25, 2017

What Are The Minimum Property Standards For An FHA Loan? Part Two

By Joe Wallace

What are the minimum property standards for an FHA loan? We discussed some of the basics in a previous blog post. Now let’s examine what the FHA loan rule book, HUD 4000.1, has to say about the minimum requirements for a home to be purchased with an FHA mortgage. HUD 4000.1 instructs the lender, “The Mortgagee must underwrite the completed appraisal report to determine if the Property provides sufficient collateral for the FHA-insured Mortgage.” “The appraisal and Property must comply with the requirements in Appraiser and Property Requirements for Title II Forward and Reverse Mortgages. The appraisal must be reported in accordance with Acceptable Appraisal Reporting Forms and Protocols.” But the rules get more detailed in this area: “The Mortgagee must confirm that the Structure of the Property will be | more...

October 25, 2017

What Are The Minimum Property Standards For An FHA Loan?

By Bruce Reichstein

What are the minimum property standards for an FHA loan? The short answer is that there is no short answer. FHA home loan rules in HUD 4000.1 require a home to be safe, habitable, and have a “remaining economic life” that will last through the entire term of the mortgage. FHA appraisals are designed to insure these minimum standards are met, but what ARE these standards? FHA Appraisals Are A Tool For The Lender The FHA appraisal is required by HUD 4000.1 to be performed by an independent, qualified fee appraiser who will physically review the property. The appraiser must look at a variety of areas on the property but is not required to step onto the roof, be an expert in electrical or HVAC systems, etc. This means that | more...

October 24, 2017

How Do You Qualify For An FHA Loan?

By Bruce Reichstein

How do you qualify for an FHA loan? Many want to know what it takes to get approved for an FHA mortgage, and you may be surprised to find out that FHA mortgage loans have more forgiving minimum requirements than other types of home loans. Lender standards will apply above and beyond FHA minimums depending on the financial institution and other factors, but in general FHA mortgages are designed to be more affordable and more forgiving where credit qualifications are concerned. Qualifying For An FHA Mortgage To begin, only owner-occupiers are allowed to get FHA loans. You can’t buy an investment property with an FHA mortgage unless you are a non-profit or a government agency (generally speaking). If you intend to purchase property you will live in as your home | more...

October 24, 2017

How Do I Know If An FHA Loan Is Right For Me?

By Joe Wallace

How do I know if an FHA loan is right for me? If you aren’t sure, consider some of the most important features of an FHA mortgage while making up your mind about the right home loan for you. FHA Loans Have Low Down Payment Requirements FHA mortgage loans have lower down payments than many conventional or other non-government backed mortgages. The minimum down payment for an FHA mortgage is 3.5% of the adjusted value of the home, and FHA loan rules permit you to get down payment help from approved sources. Credit scores play an important part in setting the down payment amount, so you’ll need to discuss your circumstances with your loan officer if you aren’t sure whether you qualify for the lowest down payment, but in general | more...

FHA One Time Close Construction Loan Option

October 23, 2017

FHA One-Time Close Construction Loan Requirements

By Bruce Reichstein

FHA One Time Close / Single Close construction loan requirements include different FICO score, escrow, and closing requirements than standard new purchase mortgages. Do you know how FHA One Time Close construction loans work? A Single Loan For The Entire Process Construction loans typically require two loans-one to purchase, and one to pay for the construction. Under the FHA One Time Close construction loan program, also known as an FHA construction-to-permanent mortgage, there is a single loan. This prevents the need for a borrower to be credit-qualified twice during the lending process. The procedure for an FHA One Time Close loan has the loan closing first, in order to pay for the land, followed by the construction phase. That means an escrow account is required in order to disburse funds | more...

October 20, 2017

How Many Times In My Life Can I Get An FHA Loan?

By Bruce Reichstein

How many times in my life can I get an FHA loan? If you are buying your first home, this is a question you might not ask until later. But it’s a good idea to know what your options are should you need to sell your first home later and begin a new house hunt. Understanding FHA Loans Knowing that FHA home loans are intended for owner-occupiers who want to use their property as their home address and primary residence helps a lot when trying to understand FHA loan rules. If you don’t plan to use the property you want to buy as your home, you won’t be able to use an FHA single-family home loan to purchase it. There are certain exceptions for government agencies and non-profit groups, but | more...

October 19, 2017

How Does FHA Deal With A Borrower’s Financial Hardship? Part Two

By Joe Wallace

How does FHA deal with a borrower’s financial hardship? That is a question we began addressing in a previous blog post, starting with an examination of the FHA attitude toward things like public assistance income, credit counseling programs, etc. In general, FHA loan rules do not allow borrowers to have public assistance income held against them as a liability, and participating in a credit counseling program is not grounds for denying an FHA mortgage loan. All income, including public assistance, must meet FHA loan standards for dependability and the likelihood of that income continuing. But just because the income is from public assistance, Social Security, etc. does not mean that income is not a valid means of financially qualifying for an FHA mortgage. Borrowers With Temporary Reductions of Income One | more...