Articles in Category: FHA Guidelines

November 5, 2018

How Do I Know If I Qualify For An FHA Mortgage?

How do you know if you qualify for an FHA mortgage? There are several minimum requirements you should know, but keep in mind that we are not discussing an individual lender’s standards (which will vary depending on the lender) but the FHA Single Family Home Loan program’s basic rules. When you talk terms with a participating FHA lender, you can discuss what additional requirements may apply with that financial institution. The Basics FHA home loans are for financially qualified borrowers regardless of their status as first time buyers or experienced home owners. There is no minimum or maximum income dollar amount specified for FHA home loan approval. Borrowers may be eligible even if they have a bankruptcy or foreclosure in their history as long as good credit has been re-established | more...

October 29, 2018

Will I Need To Fill Out IRS Form 4506-T To Buy A Home With An FHA Loan?

By Joe Wallace

When you fill out FHA home loan paperwork to purchase a home, your lender may ask you to complete IRS Form 4506-T, Request for Transcript of Tax Return. What is the purpose of this form and how does it affect your FHA loan? What Is IRS Form 4506-T Request for Transcript of Tax Return? The official site of the Internal Revenue Service says that the purpose of this form is twofold. One use is so that a transcript may be ordered free of charge, and the other use is to give permission to a third party (in this case, your participating FHA lender) to receive the transcript instead. Why Does My FHA Lender Need My Tax Information? The lender is charged with verifying the borrower’s income and employment as part | more...

October 23, 2018

Getting A New FHA Loan After Selling Your Home

By Bruce Reichstein

A lot of the advice you read about home loans in general, and FHA mortgages in particular, is aimed at the first-time home buyer. But what happens after that first-time buyer becomes a home owner, eventually sells the property, and wants to purchase another home with an FHA loan? Buying another home after selling your old one will seem very familiar in many ways, but when you purchase again after selling (or choose to sell and purchase at the same time) you will need some extra supporting documentation. Your FHA lender is requires to verify your income and debts the same way as with the original mortgage. But having purchased a home, and paid it off via the sale of the property (or even simply paying off the old mortgage | more...

October 8, 2018

Can I Buy A Rental Property With An FHA Mortgage?

By Joe Wallace

Can I buy a rental property with an FHA mortgage? This is a question borrowers ask when they are considering trying to use the property they buy with their new mortgage to earn income or even help pay the mortgage itself. Is this possible under FHA home loan rules? FHA Mortgage Loan Rules: You Must Occupy The Property You Purchase With An FHA Mortgage Most FHA single family home loans include an occupancy requirement, which means if you intend to rent a property you purchase with an FHA loan, it must be a single-unit or multi-unit home that you intend to occupy. FHA loans technically permit mortgages for properties with up to four living units. Your participating FHA lender may or may not offer home loans for multi-unit properties, so | more...

October 1, 2018

What Is A Home Loan Seasoning Period And Does This Affect My FHA Mortgage Application?

By Joe Wallace

What is a seasoning period and how does it affect an FHA mortgage loan? Simply put, the seasoning period is a required amount of time a borrower may be required to wait before even being allowed to apply for a new loan. Who does the seasoning period concept affect and why? What are the FHA home loan rules for these periods and when are they applicable? FHA Loan Seasoning Periods: The Basics A seasoning period on an FHA mortgage may be applicable for a new purchase loan in some cases, and refinance loans in others. For new purchase FHA home loans, the seasoning period applies most often to those who have had a negative credit event such as a bankruptcy or foreclosure. Bankruptcies and foreclosures require the borrower to wait | more...

Refinancing a Second Home With An FHA Mortgage Loan

September 27, 2018

Why Isn’t The Mortgage Loan Interest Rate I See On The Internet The Same Offered To Me?

By Joe Wallace

Why do house hunters find FHA home loan interest rates advertised online to be different than the interest rates offered to them by a lender? Many borrowers want to know what the difference in rates will be and why. The answer is that several variables combine when your lender is reviewing your application for a new mortgage. Your interest rate will be offered based in part on those variables. What are some of these variables? FHA Home Loan Interest Rates And Daily Market Conditions FHA home loan interest rates are affected daily by investor behavior, breaking financial news, politics, even natural disasters and holidays. The daily changes in mortgage rates may or may not be passed on to the consumer in the form of an actual higher or lower rate; | more...

September 19, 2018

How Do Student Loans Affect My FHA Mortgage?

By Bruce Reichstein

How do student loans affect your FHA mortgage? Is it harder to get FHA loan approval if you have student loan debt? What if the debt is not currently due or being paid in monthly installments? FHA loan rules in HUD 4000.1 (the FHA loan handbook) address these issues. Student loan debt is in a category of its’ own thanks to rule changes a few years ago taking student loans into account during the review for credit worthiness. Student loans once upon a time were in a category called “deferred obligations” because it was possible to have a student loan debt and not be required to pay at that moment; the amount of the deferred obligation was taken into account in a certain way by the lender. But after the | more...

September 18, 2018

FHA Loan Rules And Investment Properties

By Bruce Reichstein

FHA home loans are generally intended for owner/occupiers; there is an occupancy requirement for the FHA single-family home loan program that basically allows loans for principal residences and denies loans for those who do not intend to occupy the home within 60 days of loan closing (unless other arrangements are made for a delayed move-in which may or may not be possible depending on the lender). HUD 4000.1 has the rules that govern occupancy and the purchase of homes considered to be investment properties. HUD 4000.1 begins by defining what it considers an investment property to be: “An Investment Property refers to a Property that is not occupied by the Borrower as a Principal or Secondary Residence.” That is fairly simple, and the rules in this section go on to | more...

September 18, 2018

FHA Home Loan Rules For Sellers

By Joe Wallace

Much of our discussion here about FHA home loans is focused on the buyer; what the FHA borrower can and cannot do with an FHA mortgage or refinance loan, how occupancy rules may dictate whether a home loan is approved or not, etc. But there are some FHA mortgage loan rules that affect the seller, too. Not all the FHA loan guidelines concentrate on the lender or borrower. For example, the seller is allowed to contribute a certain amount of money toward the costs of the home loan, but those contributions cannot exceed FHA and lender limits. If the seller’s contribution DOES exceed the limit, the borrower’s loan must be reduced dollar-for-dollar for the full amount above the FHA limit. There is a list of things that can result in | more...

September 13, 2018

FHA Home Loans With Less Than Two Years Of Employment

By Joe Wallace

Are you looking for a home but don’t have an extensive employment history? The general rule for home loan approval is that the lender wants to see two years of work history. Depending on the nature of the loan and other factors, the two-year rule may have certain additional requirements that apply, and the lender may not be required to personally verify previous employment if tax records or pay stubs can reflect a two year employment record. In general, conventional loans require two years of work or education related to income, VA mortgage loans have a similar two year requirement. USDA loans also require the borrower to prove two years of work history. What are the specific requirements for FHA mortgages? According to HUD 4000.1, “For all Employment related Income, | more...