Articles in Category: FHA Loan Types

May 10, 2017

FHA Mortgages For Multi-Unit Properties

A reader asked us a question this week in the comments section about FHA mortgages for properties with multiple units. “I want to buy a 6 residential unit apartment building with a very small store front commercial space on the property (computer repair shop that takes up about 15% of the property space) I plan on living in one of the apartment units. Is there an FHA loan out there for this situation?” FHA mortgages under the single family loan program do allow FHA loans to qualified borrowers for multi-unit properties. The rules for these purchases are found in HUD 4000.1, which states: “FHAs programs differ from one another primarily in terms of what types of Properties and financing are eligible. Except as otherwise stated in this SF Handbook, FHAs | more...

May 9, 2017

Mortgage Loan Interest Rate Trends: Moving Higher

By Joe Wallace

Since our last report, mortgage loan rates have crept slightly higher and there are indications that we could see conditions favorable for that to continue depending on investor reaction to things like breaking news from other parts of the world, bond market activity, etc. What is bad for the economy is often good for mortgage loan interest rates, and vice versa. Recent developments such as the French election and the release of the most recent U.S employment data have brought good news. Mortgage rates have crept higher within the range we’ve gotten accustomed to seeing, so many affected borrowers may notice the difference in closing costs rather than actual higher rates. 30-year fixed rate conventional mortgages are still operating at a best execution range at or near between 4.0% and | more...

May 4, 2017

Part Time Income: FHA Loan Rules

By Joe Wallace

What are the rules for using part time income to qualify for FHA loans? A reader asked us a question on that topic in our comments section this week: “I have a client that worked full time for a company for eight years. In the last eight months he went to half time. Why cant we use this income since hes been at the same employer for more than 2 years?” Instructions to the lender on this issue are found in HUD 4000.1. There, we learn that for all income sources, the lender is required to do some calculations. “For employees who are paid hourly, and whose hours do not vary, the Mortgagee must consider the Borrowers current hourly rate to calculate Effective Income. For employees who are paid hourly | more...

May 4, 2017

Mortgage Loan Interest Rate Trends: Up And Down

By Joe Wallace

In our last report we noted that mortgage loan interest rate numbers could be influenced by the substance of the most recent Fed announcement, or more specifically investor reaction to those details. Rates did try to creep lower ahead of Wednesday’s Fed event, and Wednesday morning it seemed like rates were trying to move lower still. But the Fed came and went, rates began to move higher, and according to our sources at the end of the day on Wednesday we were right back to where things were at before the pre-Fed downward movement. Which is to say that rates have been moving up and down within a certain range without any real major, breaking news-type dramatic shifts. 30-year fixed rate mortgage loan interest rate numbers are in a best | more...

May 2, 2017

Cash To Close And Earnest Money: FHA Loan Rules

By Joe Wallace

All home loans have requirements for cash to close the deal, earnest money, and down payments. The FHA loan rules for these are found in HUD 4000.1, which has instructions to the lender on how to verify and process these payments. For example, on page 296 of HUD 4000.1, we learn the following: “The Mortgagee may only consider assets derived from acceptable sources in accordance with the requirements outlined below. Closing costs, prepaid items and other fees may not be applied towards the Borrowers Minimum Required Investment” also known as the down payment. Sources of cash to close and earnest money must be properly documented by the lender. FHA loan rules do not permit non-collateralized loans such as credit card cash advances or payday loans to be used for the | more...

May 1, 2017

Mortgage Loan Interest Rate Trends: Holding Ahead Of Fed

By Joe Wallace

Since our last report, mortgage loan interest rate trends have held on to some of the improvement seen last week, closing out Friday more or less unchanged, depending on the lender. This week is a big one-there is a much anticipated announcement by the Fed on Wednesday that has potential to influence rates depending on investor reaction to that announcement. It is entirely possible we could see rates in a defensive mode leading up to the fed with few changes one way or the other. There’s also an important employment report due out on Friday that could further influence rates-again, depending on investor reaction to the news. These two events, their implications, and how investors deal with all of it could make for a tricky week. There’s also breaking news | more...

April 27, 2017

An FHA Loan For A Flipped Home?

By Joe Wallace

Is a flipped home eligible for an FHA mortgage? That’s what one reader wanted to know this week. “What are the rules for buying properties that have been ‘flipped’ meaning an investor/homeowner has purchased the property did some updates and are now attempting to sale the property.” “Are there any sort of timing requirements (i.e. a buyer cant buy before 6 months after seller has purchased property)? Also, is there any sort of maximum markup on the price the investor is attempting to sale for on the property?” FHA loan rules in HUD 4000.1 are clear on this issue. According to page 146 of HUD 4000.1, “A Property that is being resold 90 Days or fewer following the sellers date of acquisition is not eligible for an FHA-insured Mortgage.” There | more...

April 27, 2017

Mortgage Rate Trends: Moving Higher

By Joe Wallace

Since our last report, mortgage rate numbers went from an incursion into sub-four percent territory for the most competitive lenders back up to highs we haven’t seen in approximately two weeks. Domestic tax policy, overseas election drama, and other factors have played a part in the recent ups and downs, but what we’re seeing is short-term influences rather than indications of a possible long-term trend. At the moment it’s tough to say what the mid-to-long term direction of rates might be. We’re in an uncertain period and much of our reporting lately on mortgage rate movement has to do with these short term issues. At the time of this writing, 30-year fixed rate conventional mortgages are back to a range between the very bottom of the four percent range and | more...

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

April 26, 2017

FHA Loans For Additional Homes: A Reader Question

By Bruce Reichstein

Are FHA loans for multiple properties possible? That’s what’s on one reader’s mind recently. “So is there a maximum number of properties one can theoretically have under FHA guidelines?” “Say for example a person owns a home in one city with an FHA mortgage and then has to relocate to another city for job reasons. While in this city there family size increases by several individuals via marriage and or kids. Would that person be able to get a 3rd FHA? mortgage.” This reader question about FHA loans is in response to a blog post we did recently about the issue of applying for another FHA mortgage while currently paying on an existing FHA home loan. The gist of that post is that while FHA loan rules do not generally | more...

April 26, 2017

FHA Reverse Mortgages: An Appraisal Question

By Joe Wallace

A reader asked us a question in the comments section recently about FHA reverse mortgages and the appraisal process for them. “We have a detached garage with a 500 square foot “mother-in-law unit” on top. Will this structure be included in the appraisal in which the reverse mortgage is based on?” FHA loan rules for appraisals are found in HUD 4000.1. Before quoting the rules for appraising what the FHA loan rule book classifies as an “accessory dwelling unit” or ADU, it’s important to remember that state law, and certain building code requirements may also apply. FHA appraisals include determining whether an outbuilding is an ADU or not. The FHA definition of an ADU is as follows: “An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, | more...