Articles in Category: Closing Costs

January 3, 2019

FHA Loan Down Payment Rules For 2019

FHA home loan down payment requirements are lower than other mortgages, and depending on circumstances your down payment commitment on an FHA mortgage could be even less thanks to down payment assistance programs and seller contributions to closing costs. FHA Home Loan Small Down Payments Elsewhere on the internet you will find writing about down payment requirements for purchasing a new home, discussing why borrowers are choosing one approach or another regarding the money they put down on the home. Conventional mortgages require private mortgage insurance (PMI) unless the borrower makes a higher down payment. A 20% down home loan transaction is not uncommon in cases where the borrower wants to avoid paying PMI. FHA home loan rules in HUD 4000.1 require mortgage insurance premiums, too, but borrowers looking to | more...

August 6, 2018

Can I Make My FHA Home Loan Down Payment In Cash?

By Joe Wallace

Some borrowers want to know if they can make their FHA home loan down payment in cash. The FHA loan down payment rules that govern single family home loan down payment sources are found in HUD 4000.1. They have specific requirements for the source of all down payment funds for an FHA mortgage. It does not matter whether you are applying for an FHA rehab loan, an FHA new purchase mortgage for existing construction, or whether you want an FHA mortgage to construct a home to suit your needs; a minimum down payment is required above and beyond all other closing costs and expenses related to the mortgage. FHA loan rules state that the lender must verify all down payment funds and make sure they come from approved sources. FHA | more...

July 10, 2018

Before Your FHA Home Loan Closing Date: What You Should Know

By Bruce Reichstein

Before your FHA home loan closes and you sign on the dotted line, there are some things you should know. Home closing paperwork spells out the agreements you have made on the mortgage and these documents are legally binding. It’s a very good idea to be familiar with them and know their contents before you sign. What kind of paperwork will you get with a new purchase mortgage loan at or before your closing date? One very important document is known as the Closing Disclosure and it should be compared to another document you received earlier in the FHA loan process known as the Loan Estimate. The estimate is not an indication that your FHA loan has been turned down or approved, it is simply a way to add up | more...

July 5, 2018

Cash To Close An FHA Home Loan: What You Need To Know

By Joe Wallace

What kind of cash to close do borrowers need with an FHA mortgage loan? The amount and nature of the cash to close the FHA loan will vary depending on several factors including the amount of your down payment, whether you have financed the Up Front Mortgage Insurance Premium or not, etc. FHA Loans Cash To Close: Your Down Payment For new purchase home loans, FHA loans cash requirements to close the deal will include the minimum 3.5% down payment for borrowers who qualify for that lowest down payment with FICO scores that meet both FHA minimums and lender requirements. 10% down is required for borrowers with FICO scores that don’t fall into the ranges specified by FHA loan rules and lender standards. But the exact amount of cash needed | more...

June 6, 2018

FHA Loan Rules For Down Payments And Cash To Close

By Bruce Reichstein

What are the FHA loan rules for down payments and the cash required to close the deal? There are many requirements in this area, but one very important detail exists that borrowers should know that will definitely help them in the early planning and budgeting stages of the mortgage. FHA loan rules require that certain expenses be kept separate from down payment requirements, and that can make a big difference in how you approach the budgeting part of home loan planning. FHA loan rules for both down payments and closing costs require that the sources of these funds be FHA-approved, which means no credit card cash advances, payday loans, or similar types of indebtedness can be a source of the closing costs or down payment. That’s important because those FHA | more...

April 19, 2018

FHA Loan Down Payment Sources: Retirement Funds

By Joe Wallace

We’ve been discussing FHA home loan down payment sources and the rules that govern them. FHA mortgage loan rules in HUD 4000.1 have strict requirements when it comes to the sourcing of down payments; since most FHA forward mortgages require a down payment, the rules in this area are very important to know ahead of your loan application. FHA Loan Down Payment Source Rules: Retirement Funds FHA loan rules permit the borrower to use retirement funds as a source of down payment money. According to HUD 4000.1: “The Mortgagee may include up to 60 percent of the value of assets, less any existing loans, from the Borrower’s retirement accounts, such as IRAs, thrift savings plans, 401(k) plan, and Keogh accounts, unless the Borrower provides conclusive evidence that a higher percentage | more...

April 19, 2018

Where Can My FHA Loan Down Payment Money Come From?

By Joe Wallace

Where can my FHA loan down payment money come from? It’s an important question to ask, and some borrowers might not understand the difference between closing costs that are not part of the down payment compared to what is allowed to be counted toward it. FHA Loan Down Payment Requirements For most forward FHA mortgages, the down payment requirement includes a minimum of 3.5% of the adjusted value of the home. Some FHA home loans such as refinance mortgages don’t require a down payment; FHA rehab loans for those in Federally declared disaster areas are not required by the FHA to make a down payment regardless of whether the rehab loan is a forward mortgage or a refi. Is My Up Front Mortgage Insurance Premium Part Of My Down Payment? | more...

Conventional Loan Interest Rates Make History, FHA Loan Rates Still Incredibly Low

March 19, 2018

What You Need To Know About Identity Of Interest Transactions

By Joe Wallace

What do you need to know about FHA loan down payment rules and identity of interest transactions? We’ve been covering this topic more recently due to some reader questions about how it all works; we’ve noticed some confusion about the rules in this area and who those rules apply to. FHA identity of interest transaction rules are specifically for borrowers who have a family or business relationship with the seller. In such cases, the general rule is that a 15% down payment is required. The confusion comes in over who this applies to. FHA Loan Rules For Down Payments When The Seller Is A Family Member Or Business Associate Because identity of interest transactions require a higher down payment, naturally borrowers want to know if there are exceptions and how | more...

March 16, 2018

How Much Is My FHA Home Loan Down Payment?

By Bruce Reichstein

How much is my FHA home loan down payment? That is a very important question to ask, since borrowers will need to save up for the down payment, or use approved sources for it. There is no specific dollar amount specified for your FHA home loan down payment, since the down payment is calculated using the adjusted value of the property following an FHA appraisal. Borrowers hoping for a specific dollar amount should estimate the amount of a possible down payment using a figure that is reasonably contained within the house hunter’s price range. This dollar amount will be an estimate only since the true value of the home for down payment purposes won’t be available until after the appraisal process is complete. FHA loan rules specify that for most | more...

March 9, 2018

FHA Loan Down Payment Rules You Should Know

By Joe Wallace

FHA loan down payment rules you should know include requirements for source funds, and what contributions by “interested parties” mean for a borrower’s minimum cash investment. FHA loan rules for down payments are found in HUD 4000.1, which has a lot to say about how much should be put down for a new purchase home loan transaction, and where that money can come from. FHA Loan Rules For Down Payments: FICO Score Requirements Did you know that your FICO score can affect how much down payment you are required to make on your mortgage loan? FHA loan rules specifically require a minimum credit score of 580 or higher to qualify for the lowest down payment of 3.5% (of the adjusted value of the home). 580 is the FHA minimum; your | more...