Articles Published in: 2023

August 11, 2023

FHA Loan Rules For Borrowers With Non-Traditional Credit

FHA loans have flexible standards regarding the kinds of credit history a borrower brings to the loan application process. By that, we mean that applicants who have non-traditional or even insufficient credit history may be able to get a loan approved depending on the circumstances. Getting a loan with insufficient credit history is harder, but borrowers can call the FHA at 1-800 CALL FHA to get a referral to a local housing counselor who can provide advice. Applying For An FHA Loan With Non-Traditional Credit Borrowers with non-traditional credit or insufficient credit history may be asked to provide additional documentation and paperwork as part of this process. You could be required to furnish tax documents, utility bills, and/or any other recurring payment that could help establish credit history. FHA loan | more...

August 10, 2023

How Long Does It Take To Refinance Into A Lower Mortgage Rate?

By Joe Wallace

In an age of high mortgage loan interest rates, some borrowers don’t have a choice. They have to buy soon and can’t afford to wait out the housing market. Some of these borrowers purchase a home with the goal of refinancing as soon as the rates fall to a better place. At press time in 2023, those rates have NOT fallen to a better place, buying now and refinancing later is an option getting more popular by the day, or so it seems. Planning Ahead Is Key Borrowers approved for FHA mortgages at the higher interest rates available at press time are wise to consider a refinance loan once home loan interest rates have fallen again but they aren’t always sure what the best options are. And more importantly to | more...

August 8, 2023

FHA Minimum Standards Vs. Lender Standards

By Joe Wallace

A frequently asked question about FHA home loan credit score requirements goes like this: “I recently applied for a mortgage loan, and my FICO scores are above 580, which FHA loan rules say is the score you need for the lowest down payment. But my lender wants a higher score for the lowest down payment. What’s going on? Who is right?” The most important thing to remember about the FICO score issue is that FHA minimum standards don’t always match the lender’s requirements. The lender is permitted a higher requirement as long as those requirements are deemed “reasonable and customary” for similar mortgages. FHA minimum standards are just that–minimums. A lender is free to require a higher credit score or look for better debt-to-income ratios, etc., as required by the | more...

August 7, 2023

FHA Loan Reader Questions: Foreclosure Wait Periods

By Joe Wallace

Here is a variation on a common reader question. “I had a foreclosure on my house. What is the waiting period before I qualify for an FHA mortgage?” The first thing to do is call the FHA at their toll-free number, 1-800 CALL FHA, and ask for a referral to an FHA/HUD-approved housing counselor in your local area. A housing counselor can assist in areas like this with advice on how to proceed toward becoming a homeowner once again after a foreclosure, bankruptcy, job loss, or other issues. The answer to the reader’s question varies greatly depending on circumstance, lender standards, and whether or not the home foreclosed upon was purchased with an FHA mortgage. While the FHA loan program does include options for borrowers who have experienced a qualifying | more...

August 4, 2023

FHA Loan FICO Score Requirements

By Joe Wallace

“Is my credit score good enough to get a mortgage?” That is among the most common questions about FHA loans and it’s easy to understand why. In times of high interest rates and competitive housing markets, every advantage counts. Do borrowers with lower credit scores still have a shot at getting a home loan? FHA loan rules for single-family home loans technically permit FHA loan approval for borrowers with FICO scores above 500. If your credit scores are within the 500-579 range you may be asked to make a higher down payment. But if your FICO scores are 580 or higher you qualify by FHA standards for the lowest 3.5% down payment. Here is the official FHA loan FICO score table from the FHA official site which lists the FICO | more...

August 3, 2023

Researching Your FHA Home Loan

By Joe Wallace

If you are a first-time FHA home buyer, there are important resources that can help you make smart choices in the earliest stages of the loan. Some of those resources come from your local real estate agent or lender, but more help can come from the FHA itself. Do Some Early Research If you include some time to research home loans in the early stages of being a first-time homebuyer, along the way you’ll likely find some information that sounds good but doesn’t really apply to you. One example comes by way of those financial commentators warning first-time home buyers away from VA and FHA mortgages. Their argument? FHA or VA loans might cost you thousands more than other mortgage loan options. The argument goes something like this. “First-time home-buyer | more...

August 1, 2023

How Much Can A First Time Home Buyer Borrow With An FHA Home Loan?

By Joe Wallace

It’s a simple question. How much can you borrow using an FHA mortgage? The answer to that question isn’t as simple as some would like. Why? Because the amount you are allowed to borrow is informed in part by FHA loan limits for the area you want to buy the home in, by the appraised value of the home, and by how much of a down payment you may be required to make. FHA Loan Amounts And Cash Back At Closing Time It’s necessary to dispel some new house hunters’ illusions about home loan limits. When you buy a house with an FHA mortgage, you aren’t allowed cash back at closing time except for refunds. If you are approved for a loan amount, and the actual amount of money needed | more...

July 31, 2023

FHA Loan Applications: How Soon Is Too Soon?

By Joe Wallace

It’s never too early to start planning and saving for an FHA mortgage. But if you have just discharged a bankruptcy or have entered the job market for the first time recently, you may be subject to waiting periods until you have enough time past the bankruptcy or your first job to qualify. There is a two-year rule for some FHA borrowers. These applicants must have at least two years in the job market or two years beyond the discharge date of certain bankruptcy types. And then there are the borrowers who may have met the minimum time-in-the-job-market requirements but have recently changed the nature of their employment. How many years have you worked as your own boss or a contract employee? If it’s under 24 months, you may need | more...

July 28, 2023

FHA Rehab Loans Versus FHA 203(b) Loans

By Bruce Reichstein

When shopping for real estate, most borrowers are thinking of the kind of mortgage such as the one known as an FHA 203(b). That’s the loan you want when shopping for a house you want to buy as-is; one that meets FHA appraisal standards and requires little to no work on the property to make it eligible for a 203(b) forward mortgage. Then there is another type of home loan option available to FHA borrowers; the FHA 203(k) rehabilitation mortgage, which allows you to buy a fixer-upper and have it brought up to FHA appraisal standards and local code requirements. The FHA 203(k) rehab loan is suitable for both new purchase and refinance applications. Regardless of whether you buy or refinance with an FHA Rehab Loan, you are permitted to | more...

July 27, 2023

Buying A Home? Questions For Your Lender

By Joe Wallace

If you have never purchased a home before, you might be wondering how you can improve the overall experience, get good advice, and make a more informed decision on purchasing a house. One way to do that is to compare lenders (five is a good number) and ask some important questions of each one. Ask Your FHA Lender Which Loans Are Most Popular Some lenders have a lot of interest in some loans and none at all for other FHA loan options. Ask each lender, “What are the most popular mortgages you offer. Why are they so popular?” If the lender can’t offer the type of loan you need, you will need to move on. Not all lenders offer all FHA loans. Some lenders won’t issue manufactured home loans, others | more...