Articles in Category: FHA Guidelines

Five FHA Home Loan Questions To Ask Your Lender

June 5, 2018

FHA Mortgage Loan Rules For Earnest Money Deposits

When it’s time to get serious about a home you want to buy with an FHA mortgage loan, the payment of earnest money is an important step toward owning the property. FHA loan rules have specific requirements for earnest money deposits; like other payments associated with your home loan transaction, there are requirements for the payment and sourcing of these funds. The FHA Loan Handbook, HUD 4000.1, explains that the lender is required to verify and document the borrower’s earnest money deposit including the amount and the source when the earnest money exceeds one percent of the sales price or, as HUD 4000.1 explains, “is excessive based on the Borrower’s history of accumulating savings”. In such cases the lender must obtain: A copy of the borrower’s canceled earnest money check; | more...

May 30, 2018

FHA Home Loans For Manufactured Housing Classified As Condo Projects

By Bruce Reichstein

Are there really FHA home loans for manufactured housing classified as condo projects? Believe it or not, the FHA loan rules in HUD 4000.1 state that such loans are indeed available under the FHA mortgage program in addition to FHA One-Time Close construction loans, FHA Rehab loans, and other options. How does the FHA Loan Handbook describe these mortgages? “Manufactured Housing is a Structure that is transportable in one or more sections. It may be part of a Condominium Project, provided the project meets applicable FHA requirements.” FHA loans for manufactured housing, regardless of whether it is part of a condo project or not, must meet certain requirements including size, purpose, and how the home is delivered to the borrower. Specifically, manufactured housing eligible for FHA mortgage loans must be | more...

May 15, 2018

FHA Home Loans And Occupancy Requirements

By Bruce Reichstein

What are the occupancy requirements for FHA home loans? Like many government backed loans, there are general occupancy requirements a borrower must follow as a condition of loan approval. Whether you are buying an existing construction home or having one built for you using an FHA One Time Close construction loan, some guidelines for occupancy will apply. FHA Definition Of Occupancy, Principal Residences FHA loan occupancy rules basically require that the borrower live in the home full time, using it as the primary residence or principal residence instead of a vacation home, time share, or other intermittent occupancy arrangement. How does the FHA specifically define “principal residence”? According to HUD 4000.1: “A Principal Residence refers to a dwelling where the Borrower maintains or will maintain their permanent place of abode, | more...

April 26, 2018

FHA Loan Approval Rules: Work History

By Bruce Reichstein

Whether you seek an FHA One Time Close construction loan or want to buy an existing-construction home, the FHA guidelines for loan approval require your lender to verify your employment and income history. How much time will the lender require you to be on the job in order to get your mortgage loan approved? That standard will vary from lender to lender, so you will need to discuss work history requirements with your loan officer. However, at a minimum, FHA loan rules require the lender to verify two years of work history. That work history does not have to be with the same company. FHA Loan Rules For Income Verification Along with your recent work history, the lender is also required to verify the income you report to the lender | more...

April 25, 2018

FHA Home Loans: Facts You Should Know Before You Buy

By Bruce Reichstein

FHA loan facts you should know before you buy include a variety of concerns, one of which is an optional issue some borrowers choose not to address until it is too late. Don’t make the same mistakes as some first time home buyers-the money you save could be significant. Never Buy A Home Without A Home Inspection It’s important to point out that the headline for this section does NOT read “Never buy a home without an appraisal”. FHA appraisals are a mandatory part of the home loan process, but inspections are on the borrower to arrange, pay for, and review. Home inspections are the only way a borrower can make a truly informed purchase. Those who rely on the appraisal alone for any new purchase mortgage do so at | more...

April 24, 2018

Low-Down Payment FHA Home Loans

By Joe Wallace

Compared to some non-FHA mortgages, FHA home loans feature low down payments-as little as 3.5% of the adjusted value of the property for financially qualified borrowers. FICO scores and other credit data will play an important part in the required down payment-if your FICO score is too low the lender may require 10% down (lender standards will vary), but financially qualified borrowers should expect 3.5% down and budget for the down payment accordingly. One type of FHA home loan may not require any down payment at all, depending on circumstances, as we’ll read below. FHA Loan Down Payment Requirements: FHA Loan Assumptions FHA loan assumption rules permit the home owner to allow another person to assume the mortgage loan-the house and the debt are signed over to someone else, with | more...

April 16, 2018

FHA Home Loans For New Construction, Existing Construction Homes

By Bruce Reichstein

FHA home loans are available for a variety of different types of property. You can use an FHA mortgage to buy a typical home in the suburbs, a condo, a town home, mobile or manufactured homes, etc. FHA home loans are also for properties classified in one of several ways; existing construction, new construction, proposed or under construction, etc. What do these terms mean and how does the property type affect the FHA home loan? In some cases the nature of the property may dictate whether a builders’ warranty must be provided. New construction homes, for example, must include a 10-year warranty. This is true for all property types that fall under the FHA definition of new construction property including proposed construction homes, under construction homes, and those that have | more...

April 11, 2018

FHA Loan Requirements For Multi-Unit Properties: Part Two

By Joe Wallace

In a previous blog post, we discussed the FHA loan rules for purchasing multi-unit properties. It’s true that an FHA borrower can buy a home with as many as four living units. It’s also possible to rent out the unused units in the home, but FHA loan rules do require at least one person obligated on the mortgage to occupy the home as the primary residence. FHA home loans are generally for owner/occupiers only. You are permitted to rent out the unused living units in your new home, but those units cannot be rented out for periods less than 30 days, offer hotel-style services such as food, bellboy service, etc. The rules for these issues are very clear, but what is to stop a borrower from purchasing a new home | more...

April 10, 2018

FHA Loan Rules On Purchasing Multi-Unit Properties

By Bruce Reichstein

Some potential FHA loan applicants are surprised to learn that they can purchase a home with as many as four living units using an FHA mortgage. For a certain percentage of FHA loan applicants, the ability to buy a four-unit property leads to thinking about becoming a landlord, renting out the units and using rental income to offset the expenses of owning the property. This has potential for some borrowers, especially those who already have experience in this area. But FHA loan rules have plenty to say about how your home may be used for such purposes. FHA loan rules in HUD 4000.1 define the acceptable uses of a home purchased with an FHA mortgage. Those uses include renting out unused living units, but with the caveat that the borrower | more...

Online Mortgage Calculators For First-Time Home Buyers

April 6, 2018

How Much Is My FHA Mortgage Payment?

By Bruce Reichstein

How much is my FHA mortgage payment? Many borrowers want to get an estimate to figure out how to budget for a mortgage payment, but it is easy to forget that calculating a home loan payment involves more than just doing the math on the principal and interest and the term of the loan. How much will your FHA home loan mortgage payment be? Much depends on what applies to your loan besides principal and interest. For example, you will need to learn how much property taxes are in your area, you will need to know what comparable homes are selling for in your chosen housing market, etc. What’s My Monthly FHA Mortgage Payment? HUD 4000.1, the FHA loan handbook, spells out all the things that will be included in | more...