September 23, 2015
With the publication of the new FHA Single Family Home Loan guidebook, HUD 4000.1, there have been some changes, updates, revisions and restatements of existing FHA loan policy. We’re examining the new rule book over time to discover what borrowers and lenders alike may need to know about FHA home loans under the new handbook.
Occupancy is an important question/issue connected with FHA home loans. HUD 4000.1 states that there is a definite occupancy requirement for new purchase single-family home loans:
“At least one borrower must occupy the property as their principal residence within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.”
There is also a requirement on non-occupying co-borrowers–they don’t have to live in the home but must meet the following FHA loan guidelines:
“Non-occupying co-Borrowers or Cosigners must either be United States (U.S.) citizens or have a Principal Residence in the U.S. ”
When it comes to military members applying for an FHA home loan, the occupancy rules are different:
“Borrowers who are military personnel, who cannot physically reside in a Property because they are on Active Duty, are still considered owner occupants and are eligible for maximum financing if a Family Member of the Borrower will occupy the subject Property as their Principal Residence, or the Borrower intends to occupy the subject Property upon discharge from military service.”
In such cases the lender is required to get documentation verifying the military member’s circumstances:
“The Mortgagee must obtain a copy of the Borrowers military orders evidencing the Borrowers Active Duty status and that the duty station is more than 100 miles from the subject Property. The Mortgagee must obtain the Borrowers intent to occupy the subject Property upon discharge from military service, if a Family Member will not occupy the subject Property as their Principal Residence.”
In general, FHA loan rules also add that United States citizenship is not required in order to be eligible for an FHA home loan, but evidence of a valid Social Security Number is. There is an exception:
“State and local government agencies, Instrumentalities of Government and HUD-approved Nonprofit organizations are not required to provide an SSN.” All of this information is found in HUD 4000.1 Section II Part A.
Do you work in residential real estate? You should know about the free tool offered by FHA.com, created especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It’s simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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