Articles by: Bruce Reichstein

July 3, 2023

Can An Eligible Veteran Build on Their Own Lot or Buy Land with a VA loan?

If you are interested in purchasing a piece of land and financing it through a VA-approved lender, there are several loan options available for you. While a standalone VA land loan is not offered, the VA loan program does allow for the purchase of land when combined with the construction costs to build a new home. This loan product is known as a VA One-Time Close construction to permanent loan. It is a convenient loan option that includes the cost of the land plus the cost of the construction and even allows any VA funding fee to be financed into the loan. This Zero out-of-pocket financing allows eligible Veterans to have a true $0 down loan. To utilize the VA loan for buying land and constructing a new home, | more...

June 2, 2023

FHA Home Loan Pre-Approval And Mortgage Loan Approval

By Bruce Reichstein

If you are considering an FHA home loan it is a smart idea to get pre-approved for a home loan before you start house hunting. If you are new to the home loan process, you might not be sure what the difference is between FHA loan approval and getting pre-approved for an FHA mortgage. What is that difference? Getting through the initial pre-approval application does not mean you’ve been fully approved for the mortgage. But it IS an important tool for soon-to-be homeowners. Home loan pre-approval is a tool for both borrower and lender to determine if you’re ready to buy based on your income, debt to income ratio levels, the amount of down payment you have saved, etc. Think of pre-approval as the start of the loan process, but | more...

May 19, 2023

FHA Loans and Your Credit

By Bruce Reichstein

Lots of people want to know what credit issues will affect the approval of FHA loans. The shortest answer is that it’s a combination of FICO scores, your repayment habits on all financial obligations (not just credit cards or revolving debt), and the amount of debt you pay on each month versus how much income you have. But there are some hard numbers to look at, too. FHA minimum requirements for credit include FICO score requirements for maximum financing. If your FICO scores are 580 or above, you technically qualify for maximum financing, which means only a 3.5% down payment. But FHA FICO minimums are not the only FICO score requirements you’ll need to meet. Credit requirements at your chosen lender can be, and often are, higher. You may find | more...

May 9, 2023

FHA 203(k) Rehab Loan Standards

By Bruce Reichstein

FHA 203(k) rehab loan standards include a list of things that can be done with a 203(k) rehab loan and a list of ineligible projects. Borrowers should know what is allowed and what is not with these FHA rehab loans. FHA Loan Rules For Renovation, Improvements, Add-Ons In general, FHA home loan programs such as the Energy Efficient Mortgage (which can be used in conjunction with an FHA 203(k) loan) and the FHA 203(k) and FHA 203(h) rehab loan feature a list of approved uses for loan proceeds. There’s a prohibition against cash back to the borrower on these transactions except where it is needed to pay for materials and labor; even then a borrower cannot “profit” from the loan by taking excess funds in cash. FHA loan rules require | more...

Build on your own lot. Construction loan basics

May 3, 2023

Build A House On Your Own Land With An FHA Mortgage

By Bruce Reichstein

Some house hunters decide to stop looking at existing construction homes and start thinking about building a house for themselves from the ground up. Other people know from the start of their homeownership journey that they want to build and not buy an existing home. FHA home loan rules in HUD 4000.1 include guidelines for lenders who want to help these borrowers. The section of the rulebook titled “Building on Own Land” tells lenders how to proceed with a construction loan including maximum loan amounts, who can act as the general contractor on the project, and more. Are you interested in having a house built for you on your own lot? Not interested in having to choose from existing construction housing? Building on your own land may be the right | more...

April 26, 2023

FHA Loan Pre-Approval

By Bruce Reichstein

What is the difference between FHA loan approval and pre-approval for an FHA mortgage? Some borrowers get confused during the initial process because it’s easy to assume that getting through pre-approval means you’ve been fully approved for the mortgage. The reality is that pre-approval is a tool for the borrower and the lender to determine if you’re ready to buy based on your income, debt-to-income ratio levels, the amount of down payment you have saved, etc. It’s the start of the loan process, but it is not a guarantee that you have an FHA mortgage loan yet. Getting pre-approved for an FHA mortgage means using an online mortgage loan calculator or other tool to add up your income, debts, interest rate, etc. The price of the home or an estimated | more...

April 17, 2023

Understanding Your FHA Home Loan Options

By Bruce Reichstein

Understanding your FHA home loan options going into the house hunting season of 2023 means knowing the different choices available to you for a mortgage. Did you know that FHA home loans are available for mobile homes, condos, and manufactured housing? There are many options for property size and type. You can buy a property up to four units large using an FHA mortgage. What Kind Of Home Do You Need? Choices matter when reviewing your home loan options. Choices that include how many units you want in your home (one to four-unit homes can be purchased with FHA mortgages) and the type of property you want; condo units, townhouses, mobile homes, manufactured housing, and even the ability to build instead of buy can be part of your decision-making process. | more...

April 10, 2023

Buying A Home With A Lower Credit Score

By Bruce Reichstein

What can you do if you know your credit isn’t perfect but need to buy a home with an FHA mortgage? Actively Work On Your Credit The most effective way to change your credit rating and improve it is also the simplest. Make all payments on time for at least one year before your home loan application. This is the first step toward getting yourself ready to be approved for a mortgage loan. Review Your Credit Report If you don’t know what your credit report says, you are not ready for a home loan. It really is as simple as that. Learn How To Understand Your Credit Report A credit report is essentially a record of how you deal with your financial obligations. One of the leading credit reporting agencies, | more...

March 31, 2023

Make The Most Of Your FHA Home Loan

By Bruce Reichstein

Your home loan choices aren’t limited to the type of home loan available. The marketplace offers FHA, conventional, USDA, VA, and other options. But some of the choices in the FHA home loan program may change how you think about buying a home. Should you build instead of buy? Should you consider a fixer-upper? Or would you rather buy an existing house you can move into right away? FHA Loan Program Options It’s not a simple matter of deciding between whether to have a home constructed on your own lot by applying for an FHA One-Time Close construction loan or choosing the FHA 203(b) loan to purchase an existing-construction home. Borrowers also have the option to choose a fixer-upper home and apply for an FHA 203(k) Rehabilitation loan to pay | more...

Construction Loan Advice For New Borrowers

March 27, 2023

Are You Ready For A Construction Loan in 2023?

By Bruce Reichstein

You can use a One-Time Close construction loan to build a new home on your own land or land you buy in conjunction with the loan. This is a good option to think about if you want a house with designs you’ve approved instead of buying someone else’s house. Getting Your Loan Started Finding a participating FHA or VA lender, depending on the loan you choose is an integral part of the construction loan process. You should also know that construction loan mortgages require higher FICO scores and more time before move-in than a typical home purchase loan. But the end results are worth it. But just as important? Finding the right builder. One-Time Close loans don’t allow the borrower, builder, relatives of the buyer, etc . to act as | more...