Articles by: Bruce Reichstein

January 17, 2023

Closing Costs Versus Down Payment

Some borrowers get confused over the differences between closing costs and the required minimum down payment of 3.5% needed for FHA home loans. The confusion often comes over what is considered a down payment versus what is considered to be part of the borrower’s closing costs. The most basic thing to know is that the FHA home loan down payment is a standalone payment. It is NOT reduced by the amount of closing costs you pay such as the lender’s fee, appraisal costs, title fees, inspection fees, etc. But that isn’t all-FHA home loan rules, for example, do not permit your down payment to come from the seller. But FHA loan rules DO permit your seller to contribute a certain amount toward the closing costs of the loan. Note the | more...

The FHA Loan That Helps You Build On Your Own Lot

January 13, 2023

FHA One-Time Close Construction Loan Limits Are Higher In 2023

By Bruce Reichstein

If you want to build a home from the ground up using an FHA One-Time Close Construction Loan, there’s good news for you in 2023. Your buying power has increased thanks to FHA loan limits published at the start of the new year. The Department of Housing and Urban Development issues updated FHA loan limits on an annual basis. The limits vary depending on whether the housing market in a given zip code is considered typical, high-cost, or low-cost. In 2023, the limits for all FHA forward mortgages (including FHA One-Time Close Construction Loans) increased in many areas across the USA. FHA loan limit calculations include a nationwide forward mortgage limit ‘floor’ and ‘ceiling’ for a one-unit property. If you want an FHA One-Time Close Construction Loan in 2023, the | more...

What Credit Score Is Needed For An FHA Mortgage?

December 30, 2022

Are You Ready To Buy A Home With An FHA Mortgage?

By Bruce Reichstein

Are you ready to buy a home with an FHA mortgage? There are ways to tell how close you are to being ready to start house hunting and move out of the planning stages of your new home loan. Do You Know Your FHA Loan Limit? FHA loan limits are higher in 2023, you will want to know how much higher the limit may be in your housing market compared to last year. FHA home loan limits vary depending on the housing market; some areas are more expensive than others and have a higher loan limit, while others are “average” and conform to the median FHA loan limit nationwide. Some housing markets may be less expensive than others and feature a lower FHA loan limit, but the only way to | more...

December 26, 2022

What Are The FHA Loan Rules For Investment Properties?

By Bruce Reichstein

FHA home loans have “approved property” rules found in HUD 4000.1, the FHA loan handbook for Single Family Mortgage loan transactions. These rules include a list of approved uses for FHA mortgages, approved property types, and the kinds of property which can never be purchased with an FHA single-family mortgage. First and foremost, FHA loans are intended for owner-occupiers, which means that FHA mortgages for vacation homes and other intermittent-occupancy purposes are not possible. Borrowers cannot use an FHA loan to open a bed and breakfast or to purchase a timeshare, condohotel or similar property. FHA mortgage loan rules in HUD 4000.1 also state the following, intended to prevent the use of single-family home loans for business purposes: “FHA will not insure more than one Property as a Principal Residence | more...

December 17, 2022

FHA One-Time Close Construction Loans: Five Facts You Should Know

By Bruce Reichstein

You don’t have to purchase someone else’s house–you can use an FHA construction loan to build your dream home to your specifications using plans you approve. The FHA One-Time Close construction loan makes it easier by eliminating the two-loan process, consolidating the construction loan into a single application, a single approval process, and a single closing date. Construction Loan Fact One: Multiple Options FHA One-Time Close mortgages are not the only option; there are several different types of One-Time Close loans, also known as single-close construction loans. There’s the FHA version, but also a USDA construction loan for those who demonstrate financial need, and a VA construction loan version for those with qualifying military service. And these construction loans are available for any financially qualified borrower who meets program standards. | more...

December 9, 2022

HUD Announces Energy-Efficient Initiatives

By Bruce Reichstein

The Department of Housing and Urban Development has announced a climate forward green housing initiatives as part of an update to the HUD program known as the Rate Reduction Initiative, or RRI. RRI supports the HUD Climate Action Plan. That plan was created to foster “climate resiliency, reduce greenhouse emissions, and pursue environmental justice in housing” according to HUD.gov. RRI relies on partnerships with public housing providers, with one stated goal (among many) of encouraging the reduction of public housing utility costs beyond what may already be required by state law, saving money, and helping the environment at the same time. The RRI plan encourages public housing agencies to negotiate special rates with utility companies, or purchase energy through a third-party broker. It also encourages arrangements between utility companies and | more...

December 2, 2022

Higher FHA Loan Limits For 2023

By Bruce Reichstein

On Thursday, December 1, 2022, the Federal Housing Administration published the new FHA loan limits for 2023. There are higher loan limits for FHA forward mortgages in 2023 and also higher limits for FHA Home Equity Conversion Mortgages. Most of the country gets this loan limit increase in 2023. The higher limits come thanks to house price appreciation during the first half of 2022. Such home price changes are typically included as part of the calculations FHA makes to set the limits” each new year. A press release at HUD.gov notes these limits, “reflect steep increases in home prices throughout much of the country” according to Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon, who was quoted in the press release. Commissioner Gordon adds the higher limits, “…will | more...

November 16, 2022

FHA Home Loans And Housing Counseling

By Bruce Reichstein

Even in the best of times, buying a home can be tough. It’s hard for first-time buyers to know what to expect, and in an era of rising interest rates and limited housing supply, it’s more important than ever to be a fully-informed borrower. FHA home loans are for many different kinds of borrowers. They are for experienced and first-time home buyers alike. But it’s easy to feel overwhelmed by the process if you are new to it or haven’t purchased real estate before. That is one reason why it’s a very good idea to consider talking to a HUD-approved housing counselor. Did you know you can call the FHA at their toll-free number, 1-800 CALL FHA, and request a referral to an approved housing counselor? The Department of Housing | more...

October 31, 2022

Important Features To Consider When Shopping For A New Home

By Bruce Reichstein

Are you new to house hunting? There are things to look for when considering homes to buy with an FHA mortgage. These are features that often may enhance the home and make it more efficient. Once you are used to shopping around for a home, you can establish a checklist to remind you as you review each property. Ceiling Fans Not all homes come with ceiling fans. Are you buying a home in a warmer or more humid climate? A lack of ceiling fans can be a drawback; homes that do not have them installed might have other issues such as mold or mildew, but this will depend greatly on how the individual house was maintained. Exterior Lighting Exterior lights can provide additional safety, and not just to prevent burglaries | more...

October 25, 2022

FHA Rehab Loans: The Limited 203(k) Option

By Bruce Reichstein

FHA 203(k) rehab loans include an option for smaller, less ambitious rehab projects. Borrowers who want a home loan to do rehab or repair work but don’t want to do a large project might assume FHA loan funds are not available, but this is not true thanks to the FHA Limited 203(k) Rehab Loan option. What Is The FHA Limited 203(k) Rehab Loan? HUD 4000.1, the FHA loan handbook, describes the FHA Limited 203(k) mortgage as being good for “minor remodeling and non-structural repairs”. The rules for this loan state that the total rehabilitation cost may not exceed $35,000. The good news? There is no minimum repair cost for this type of rehab loan. Ineligible Projects For FHA Limited 203(k) Mortgages HUD 4000.1 features a list of things 203(k) funds | more...