Articles in Category: FHA Loan Types

November 10, 2016

FHA Condo Loans: Owner/Occupancy Requirements

FHA loans include the option to fill out a loan application for condo loans. Borrowers can apply to purchase a condo unit as long as the condo project is either on the FHA approved list or is added to that list. Recently we reported on the FHA’s change in rules for occupancy requirements for approval of condo projects. According to an FHA mortgagee letter, “In accordance with the passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA), the Federal Housing Administration (FHA) is required to provide guidance on the percentage of owner occupied units required to obtain condominium project approval.” To be put on the approved FHA condo loan list, the project must meet specific requirements including an owner/occupier ratio. That ratio is addressed in that mortgagee letter | more...

November 10, 2016

FHA Good Neighbor Next Door Loans

By Joe Wallace

A reader asks, “Im active duty military stationed overseas with 2 years left on my tour, and I’m interested in buying a home in my state or record to return to. If I take leave and occupy the house multiple times throughout the year, and have family watch it. Am I able to qualify under the FHA Good Neighbor Next Door Program? Or is that unlikely? The FHA Good Neighbor Next Door program is described on the FHA official site: “The Good Neighbor Next Door (GNND) sales incentive permits an Owner- Occupant Borrower who is a full-time law enforcement officer, teacher, firefighter, or emergency medical technician who meets HUD requirements to purchase a specifically designated HUD REO Property located in a HUD- designated revitalization area with FHA-insured financing at a | more...

November 9, 2016

FHA Loan Options: What You Should Know

By Joe Wallace

Are you thinking about purchasing a home? Or refinancing your current home loan? FHA mortgage loans and refinance loans offer a variety of options. For new purchases, an FHA mortgage loan allows qualified borrowers to purchase typical suburban homes, but also condo units, town homes, and manufactured homes. Any property that has a permanent foundation or will be affixed to a permanent foundation at closing time may be eligible for an FHA mortgage. (All homes considered for purchase with an FHA loan are subject to an appraisal and must meet basic FHA standards.) Heading 2 For new purchase loans, borrowers can choose a fixed interest rate mortgage or an adjustable rate loan. Borrowers who choose adjustable rate mortgages will be offered an introductory rate, and overall your FICO scores and | more...

November 8, 2016

Divorce and FHA Loan Applications

By Joe Wallace

FICO scores, debt-to-income ratios, and credit history aren’t the only things that can factor in when the lender is gathering data from your FHA mortgage loan application. Borrowers who are divorced may experience additional requests from the lender for paperwork or supporting documentation. We get questions about issues like these quite frequently. Here’s one recent example from the comments section: “Legally divorced in SC for close to seven years. There was no alimony, no children, and bills were split. The underwriters for an FHA re-finance are demanding a copy of the Separate Maintenance and Property agreement filed at the time of separation, a full year and a half before the divorce. I dont have a copy of it, so I have to either buy one online or miss a days | more...

November 7, 2016

Mortgage Rate Trends: Improving Slightly

By Joe Wallace

Mortgage loan interest rates are not directly tied to things like scheduled economic data releases. Friday’s job report, for example, is not directly associated with rate movements, but investor reaction to such reports can and often does influence mortgage rates. The usual rule of thumb is, in general, what is bad for the economy often benefits interest rates. So when you get good news (or at least, better news) in a job report, you could reasonably expect conditions to be favorable to higher mortgage rates assuming you use that rule of thumb. But sometimes that rule won’t apply for one reason or another, and that was the case on Friday when mortgage rates improved slightly even though the jobs data was stronger than some thought it might be. In this | more...

November 3, 2016

Mortgage Rates: Slightly Better

By Joe Wallace

Mortgage loan rates recovered a bit on Wednesday, making nearly a full week of either no upward movement or slight recovery on a daily basis. Borrowers affected by these four days will likely have noticed the differences in closing costs rather than adjustments in rates. There was some attention paid to Wednesday’s Fed announcement, since past versions of this have either moved or had serious potential to move mortgage loan rates based on investor reaction to the contents of such announcements. But this time around, there was nothing noticeable; the markets seem more interested in the uncertainty surrounding political events at the moment. 30-year fixed rate conventional mortgages are still at or near 3.625% best execution. FHA mortgage rate conditions haven’t altered either, holding steady in the comfort zone range | more...

November 1, 2016

FHA Condo Loans: New Requirements

By Joe Wallace

The FHA official site has updated owner/occupier requirements for FHA condo loans. In a press release issued in late October, the agency announced changes effective immediately; “The Federal Housing Administration (FHA) today announced that, under certain circumstances, it will lower its required owner-occupancy standard for approved condominium developments…FHA currently requires that approved condominium developments have a minimum of 50 percent of the units occupied by owners.” The press release adds that “this requirement can be lowered to 35 percent for existing condo developments provided the project meets certain conditions.” The press release states that The Housing Opportunity through Modernization Act of 2016 (HOTMA) included instructions to the FHA, “to issue guidance regarding the percentage of units within an approved condominium development that must be owner-occupied. While having too few owner-occupants | more...

October 31, 2016

Mortgage Rates: Friday Recovery

By Joe Wallace

Since our last report, rates have remained in an upward trend, but Friday saw a bit of relief after a spike on Thursday. Mortgage rates have been moving upward, hitting their highest levels in many months, but they are still below four percent even with the current trend. Some market watchers blame bond market weakness for at least part of this upward trend, but there have been important economic developments abroad (Many have been keeping watch on European Central Bank news) and at home (scheduled economic data releases and news from the Fed) that have also contributed to the current rate environment. Friday rates recovered a bit, reflected in closing costs for many rather than an actual change in the best-execution rates reported here. 30-year fixed rate conventional mortgages are | more...

October 26, 2016

FHA Mortgage Maximum Loan Amounts

By Joe Wallace

FHA home loans feature a maximum loan amount that varies depending on the housing market and other factors. There’s no single set dollar amount that establishes a limit for how much loan the FHA will guarantee, though many housing markets do feature the same general FHA loan limit based on calculations made on a yearly basis. The reason a specific loan limit dollar amount cannot be given is because FHA loan limits are also affected by the loan-to-value (LTV) ratio which may vary in each transaction. This ratio is basically a calculation of the percentage of the loan satisfied by the down payment. With a typical FHA single family forward mortgage, the LTV is 96.5% based on a minimum down payment of 3.5%. HUD 4000.1 discusses maximum mortgage loan amounts | more...

October 25, 2016

FHA Loan Assumptions: A Reader Question

By Joe Wallace

A reader got in touch with us recently via our comments section, with a question about FHA loan assumptions. She asked, “Are FHA refinance mortgages assumable?” This is an interesting take on the loan assumption question, since many of our prior questions in the comments section are asking if FHA loan assumptions are possible in a general sense. The specific query about refinanced loans is one we haven’t seen in recent months, but FHA loan rules in HUD 4000.1 are quite specific: “All FHA-insured Mortgages are assumable.” That is found on page 691 of HUD 4000.1, which also adds, “The Mortgagee must not impose, agree to, or enforce legal restrictions on conveyances or assumptions after closing except when: -specifically permitted by HUD regulations; or -the restriction had been specified in | more...