Articles in Category: FHA Loan Types

October 6, 2023

Buying A Home In A Difficult Housing Market

Do you plan to buy a home in 2024? If you are currently planning and saving for your loan, you likely have seen headlines predicting a tough market in the coming months. According to a 2023 article published by CNBC, home prices are expected to keep rising in 2024. Those are observations based on real estate forecasts from the National Association of Realtors and federal agencies. What should you know about buying a home as we head into 2024? In some cases it may be a simple matter of adding extra time into your home loan process for planning and saving. For others, it may be a matter of choosing the right type of mortgage loan. For example, instead of competing for a limited inventory of existing homes, some applicants | more...

October 5, 2023

FHA Loans, Bank Accounts, And Verifiable Income

By Joe Wallace

Some FHA borrowers want to know if they can use a business bank account for verifiable income purposes when applying for an FHA mortgage. Unfortunately, this question is open-ended, and the answers depend on circumstances. These issues are typically handled on a case-by-case basis. Does the business bank account belong to the borrower because he or she is a freelancer or self-employed? Is this an expense account that belongs to an employer? Such situations may have different issues affecting whether funds deposited to this account may be used as verifiable income. Those who are self-employed must provide documentation, including tax records and other paperwork that demonstrate that the income from the business is reliable and likely to continue. Freelance or contract employees would likewise be required to provide evidence that | more...

October 3, 2023

How FHA Loans Differ From Other Government-Backed Mortgages

By Joe Wallace

There are several government-backed mortgage loan programs including FHA mortgage loans, VA loans, and USDA mortgages. What makes FHA mortgages different than VA or USDA home loans? How FHA Home Loans Work The FHA does not lend money to borrowers. Instead, it allows third party lenders who meet FHA standards to underwrite and process FHA mortgage loans, which have a percentage of the mortgage guaranteed by the government. That makes the potential losses to the lender lower should a borrower default on the mortgage. FHA home loans have lower credit score requirements, feature lower required down payments, and have borrower-friendly rules such as a requirement that there be no financial penalty for early payoff of the mortgage. FHA loans are backed by the government, making them a better deal for | more...

September 19, 2023

How Much FHA Loan Do You Need?

By Joe Wallace

How much can you borrow with an FHA mortgage? If you are looking at FHA loan limits as a new home buyer, it’s easy to assume those numbers represent the total amount that the lender will offer once the loan application is approved. But should you expect to borrow that maximum loan amount? FHA Loan Limits 101 FHA loan limits vary. They are not identical for all housing markets or housing sizes. There is a maximum loan amount for high-cost counties, FHA loan limits are higher for multi-unit homes, and there is a lower FHA loan limit in areas that don’t cost as much as the most expensive housing markets. What To Know About FHA Loan Limits FHA loan limits have a maximum or “ceiling” for high-cost housing markets and | more...

September 15, 2023

What You Should Know About FHA Energy Efficient Mortgages

By Bruce Reichstein

The FHA Energy Efficient Mortgage (EEM) loan program was started back in 1992 as a pilot program in five states. A few years later, the program was expanded nationwide. According to the FHA official site: “EEM is one of many FHA programs that insure mortgage loans–and thus encourage lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first-time homebuyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get).” Borrowers who use FHA loans can add the required FHA upfront mortgage insurance premium to their home loan or pay in cash at closing. There is a monthly premium paid as part of the monthly mortgage payment. The FHA EEM is an add-on to a standard | more...

September 13, 2023

Tips You Should Know About FHA Loan Down Payments

By Joe Wallace

Down payment issues may vary depending on the home loan you select, whether it is an FHA loan, a VA mortgage, or a USDA construction loan, but some things are common for all mortgages where down payment money goes. Do You Need A Down Payment Gift? Get It In Writing A participating FHA lender can accept down payment gift funds from a variety of sources. The money can come from family, friends, and employers. But these gift-givers must also provide a letter detailing where the cash comes from and that it does not come from unapproved sources, which we will explore below. The down payment gift letter must explain where the money is from, such as cash saved at home, investments that have been cashed in for the gift, or | more...

September 12, 2023

Do You Want To Buy A House This Year?

By Joe Wallace

Do you want to buy a house this year? There is still time in 2023 to take advantage of the lower FHA loan limits set at the beginning of the new year. There are also things you should do to prepare for the loan, and it’s a very good idea to give yourself extra time to get it all done. It’s best to come to the application process with the following steps already accomplished. Check Your Credit Report Start reviewing your FICO scores and details to make sure there are no errors, identity theft, outdated information, etc. You are legally entitled to a free credit report. Contact Experian, Equifax, and TransUnion to learn more about contesting errors or other issues on your credit reports. Use A Mortgage Calculator An online | more...

September 11, 2023

Things You Can Do With An FHA Mortgage

By Joe Wallace

What can you buy with an FHA mortgage? First-time home buyers and experienced home buyers who have never used an FHA mortgage sometimes wonder whether they can use an FHA loan to buy certain property types. We examine some of these issues below. Remember that state law, local ordinances, and FHA loan rules may change over time, it’s best to reexamine the rules before you start your house-hunting phase of the journey. Use An FHA Loan To Buy A Multi-Unit House One permitted use of an FHA home loan program is buying a multi-unit property. You can use an FHA mortgage to buy a house with as many as four living units. Use An FHA Loan To Buy A Multi-Unit Rental Property This is allowed by FHA loan rules. The | more...

September 8, 2023

Buying A Home With A Refinance Strategy

By Joe Wallace

For some, buying a home in 2023 is a bad idea. At least, that is the impression some get when looking at today’s high interest rates in the third quarter of the year. Some compare these numbers to the rates available a year or two ago and wonder why they should consider buying a house in today’s market. Saying no to an FHA home loan in these circumstances could be the right answer for those without a refinance strategy to help them get out of today’s higher rates as soon as lower interest rates are offered consistently. But what about those who think long-term and have a strategy to refinance their home loan as soon as it’s feasible? FHA Loans And Housing Market Competition Major news outlets reported mortgage loan | more...

September 5, 2023

FHA Home Loans And High Interest Rates

By Joe Wallace

Interest rates on FHA home loans, VA mortgages, and conventional equivalents are higher in 2023. Consider the rates listed in the first five days of September, when the numbers reflected rates between 6% and 7.6%. Those numbers are a serious increase from the record-setting interest rate days of 2020. Looking at just one day, 16 September 2020, we learn home loan interest rates were listed below 3% for qualified applicants. Despite the higher numbers we see in the fall of 2023, some borrowers will not wait for rates to come down. Instead, these borrowers are applying, getting approved, and buying now regardless of rates. Why do some choose to buy now? Are they taking foolish risks with their money? Not in all cases. Some borrowers enter the house-hunting process with | more...