Articles in Category: FHA Guidelines

August 23, 2018

Why Do People Choose FHA Mortgages Instead Of USDA Home Loans?

Why do some borrowers choose FHA home loans instead of the no-money-down USDA home loan? There are several reasons why an FHA mortgage might be the better choice depending on circumstances. USDA Mortgages Versus FHA Home Loans: Down Payment Requirements USDA loans do offer an advantage to eligible borrowers with a zero down payment requirement. USDA loan rules state that in some cases, borrowers who have assets higher than the USDA limit “…may be required to use a portion of those assets”. FHA home loans require a minimum down payment of 3.5% of the adjusted value of the home. The down payment requirement may be higher if there are other factors to consider including a non-occupying co-borrower (depending on circumstances), FICO scores that are lower than the limit for maximum | more...

August 7, 2018

Is An FHA Home Loan Right For You?

By Bruce Reichstein

Is an FHA home loan right for you? An FHA mortgage or refinance loan may be right for borrowers who have plans for the home that meet FHA loan rules, and who meet the FHA and lender credit qualifications required for loan approval. Some potential FHA borrowers or refinance loan applicants might assume by reading the above that FICO score requirements and other credit qualification issues are hard to meet. But FHA mortgage loans and refinance loans have more forgiving FHA requirements than conventional mortgages. Your lender may have standards higher than the FHA loan minimums, but in general these are still more lenient in many cases than conventional mortgages. Are you right for an FHA mortgage? There is a little checklist of questions that can help you figure out | more...

July 25, 2018

How Many FHA Mortgages Can I Have?

By Bruce Reichstein

How many FHA mortgages can I have? This question is often on the minds of those who are interested in buying an investment property using an FHA mortgage. Understanding the FHA loan rules in this area can save a potential borrower a lot of time. FHA Home Loans For Investment Property? FHA home loans cannot be used for investment properties. In this context, the phrase “investment property” refers to a single-family home with between one and four units that the borrower does not intend to personally occupy. It also refers to any type of intermittent-occupancy property such as a bed-and-breakfast, condohotel, or other property that is not primarily residential in nature and that the borrower won’t personally live in as her or his home. FHA Loan Rules For Occupancy and | more...

July 18, 2018

Things To Ask About Buying Condos And Other Homes

By Joe Wallace

If you are in the market for a condo that you want to buy with an FHA home loan, there are some important questions to ask before you commit. Some of these questions apply to any property type, but some more specifically apply for condo loans or FHA home loans for properties that come with a requirement to join a Homeowners Association (HOA) or agree to its’ rules. What should an FHA borrower ask a seller about a condo unit or a home governed by a condo association agreement or homeowner association agreement? First, ask if any applicable agreements include a Right of First Refusal, which requires the borrower to submit any sale or transfer of the home to the association for approval. FHA loans cannot be approved for properties | more...

July 17, 2018

FHA Home Loans And Your Credit Report: Know Your Rights

By Bruce Reichstein

When you look for advice about getting approved for an FHA home loan, you will find that many encourage potential borrowers for FHA new purchase home loans and FHA cash out refinancing are urged to request a free annual credit report. Free credit reports are your legal right and you are entitled to one free credit report per year from each of the three major credit reporting agencies. Those agencies are TransUnion, Equifax, and Experian. But in addition to the right to a free annual credit report, did you know you have other rights under federal law that apply to your credit reports? All consumers in the United States have the legal right under federal law to contest inaccurate or incomplete information in your credit reports. This right is discussed | more...

July 11, 2018

What You Need To Know About FHA Loan Applications And Loan Approval

By Joe Wallace

What should you know about FHA home loan applications and FHA loan approval? Before your home loan gets final approval from the underwriter, it will go through a series of processes including the credit check, appraisal, employment verification, and much more. But FHA home loan approval depends on more than one set of standards, which makes these check and approval processes more complex. To approve your loan, the lender must answer a variety of questions about the borrower’s ability to afford the loan. FHA Loan Approval Questions Your Lender Must Answer There are several areas the lender must have answers in to give you final loan approval: What is the borrower’s current or expected income? What kind of assets does the FHA loan applicant have? What is the FHA borrower’s | more...

July 6, 2018

Home Buying Tips For The First Time FHA Borrower

By Bruce Reichstein

Do you need house buying tips as a first time home buyer? If you are ready to stop using rental units and are interested in becoming a home owner, there are some very important steps to take before you apply for an FHA home loan. Consider Home Prices In Your Area: How Good Or Bad Is Your Real Estate Market? Are prices in your area reasonable? Within your budget? It’s a very good idea to become literate in the average prices for a home in your area so that you can tell if a seller is asking a reasonable price for the property you want to buy. It is just as important to know how much home you can afford. A two-bedroom property may be within your financial reach, but | more...

What Credit Score Is Needed For An FHA Mortgage?

June 13, 2018

FHA Home Loans With Non-Occupying Co-Borrowers

By Bruce Reichstein

Do FHA home loans have rules for transactions with non-occupying co-borrower? The short answer is yes, there are considerations for FHA mortgage loans that feature one or more borrowers who will occupy the property, but also a borrower who will not. These rules are found in HUD 4000.1 and include requirements for the basic transaction-at least one borrower MUST occupy the home to be purchased with an FHA mortgage as a condition of loan approval. This is normally supposed to happen within 60 days of loan closing according to FHA loan rules. Lender standards may also apply. FHA loan rules have some basic requirements for co-borrowers who will not occupy the home, including the following from HUD 4000.1: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take | more...

June 8, 2018

FHA Loan Rules: Can The Seller Provide Appliances As Part Of The Sale?

By Bruce Reichstein

FHA home loan rules in HUD 40001. state that a seller can make contributions as an incentive to a buyer considering the purchase of the seller’s property with an FHA mortgage. But those contributions are limited to six percent of the purchase price. Anything more constitutes something known as an inducement to purchase. The FHA loan rules don’t penalize the borrower or seller for this per se, but anything deemed an inducement to purchase will result in a dollar-for-dollar reduction in the loan amount based on the financial value of those inducements (which, again, are in excess of six percent of the purchase price.) All that said, FHA loan rules also exclude certain seller contributions from consideration under the six percent rule; the seller can freely add certain things without | more...

June 7, 2018

Reasons FHA Will Approve The Purchase Of A Second Home With An FHA Mortgage

By Joe Wallace

FHA loan rules in HUD 4000.1 require occupancy of the home as a condition of loan approval. This means that if you are buying, building, or refinancing a mortgage using a new FHA loan, at least one borrower obligated on the mortgage must live in the home as the main residence or home address. But there are some exceptions allowed in certain circumstances where a borrower can apply to buy another home with an FHA mortgage without selling the property originally purchased with an FHA guaranteed loan. What are these exceptions? Relocation To Another Area If a borrower’s job demands include a change of address, another FHA mortgage (without selling or paying off the first FHA loan) may be possible. This is permitted when the borrower is “relocating or has | more...