Articles in Category: FHA Guidelines

November 21, 2017

What Are The FHA Loan Rules For Occupancy?

What are the FHA loan rules for occupancy? This is a question many borrowers are curious about, especially those who are interested in becoming landlords and earning rental income from their property. Does the FHA single family home loan program allow a borrower to rent out the property purchased with an FHA mortgage? FHA Loans Are Specifically For Owner/Occupiers HUD 4000.1, the FHA loan handbook, states clearly that at least one person obligated on the FHA mortgage is required to use the property as their primary residence: “At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.” Furthermore, the FHA clearly defines what it considers to be a “principal residence”. On page 140 of | more...

November 16, 2017

What Should I Know About FHA Loan Requirements?

By Joe Wallace

What should I know about FHA loan requirements? The first thing to keep in mind is that no single factor determines your ability to borrow. Your FICO score is an important part of the loan approval process, but it’s not the only thing you will need to pay attention to in the 12 months leading up to your loan application. FHA Loan Approval Requirements FHA loan standards include a review of your FICO scores to determine whether you are eligible for maximum financing with a 3.5% minimum down payment. Those with FICO scores at 580 or higher are technically eligible for maximum financing. However, this is the FHA loan program minimum standard and your lender may have higher FICO score requirements. FICO scores affect your down payment, interest rate offerings, | more...

November 15, 2017

Do The Same FHA Loan Requirements Apply to All Borrowers?

By Joe Wallace

Do the same FHA loan requirements apply to all borrowers? This is a complex question, and the answer depends greatly on whether credit issues are being discussed or whether general requirements for loan approval outside FICO scores are the topic. What’s the difference? Basically, FHA loan rules apply for all borrowers when it comes to the basic minimum requirements, standards, and verification processes for a certain type of mortgage. If you apply for a new purchase mortgage, those basic requirements will affect your transaction. But the basic requirements for an FHA reverse mortgage are not the same as those for a new purchase loan and so there are different standards for that type of loan including an age requirement. FHA reverse mortgages are only for qualified borrowers age 62 or | more...

Is U.S. Citizenship Required For An FHA One-Time Close Construction Loan?

November 13, 2017

FHA One-Time Close Construction Loan Rules: Utilities

By Joe Wallace

FHA loan rules for One-Time Close / Single-Close construction loans include a set of requirements the finished property, which must meet both state/local building code and FHA loan minimum property standards. Those FHA standards include a set of requirements for access, utilities, and water quality which must be met as a condition of loan approval. It’s surprising to some FHA loan applicants that certain features of a new construction home are A) regulated and/or B) allow things like septic tanks or wells. But not all properties are the same, and some construction issues are present in some housing markets that aren’t a consideration elsewhere. Well water is a great example. When a resident of a large metropolitan areas thinks of a new construction home, it’s likely that issues surrounding wells | more...

November 9, 2017

Does The FHA Have An Inspection Checklist?

By Bruce Reichstein

Does FHA have an inspection checklist? The question is a popular one, but it reveals a common misconception about the nature of FHA appraisals. It is one that’s extremely important to clarify-the FHA appraisal is NOT a home inspection and shouldn’t be considered one. The FHA Appraisal Is A Tool For The Lender, Not The Borrower In spite of the fact that an FHA appraiser is required to insure the property to be purchased with an FHA home loan meets minimum standards, the real usefulness of the appraisal is NOT for the borrower. The lender uses the appraisal to determine the fair market value of the home and that purpose should be considered its’ primary end result. That means the FHA appraisal is NOT a stamp of FHA approval, or | more...

November 6, 2017

Why Do People Prefer FHA loans? Part Two

By Joe Wallace

Why do people prefer FHA loans? That’s a question we’ve been examining recently. In a recent blog post we discussed FHA loan down payments, credit requirements, and related issues-all reasons people might turn to an FHA mortgage instead of a different kind of home loan. But there are other reasons to think about FHA mortgages, reasons that aren’t as as top-of-mind as what kind of down payment you might need. Consider the consumer protections and benefits built in to FHA mortgages that make these loans attractive. FHA Loans Permit Early Payoff Of The Mortgage Without Penalty The FHA lender handbook, HUD 4000.1, states that the borrower cannot be penalized for early payoff of the mortgage. In a section covering pre-payment of FHA loans, “pre-payment” is defined as follows: “A Partial | more...

November 3, 2017

What Should I Know About FHA Loan Employment And Income Verification?

By Joe Wallace

What should I know about FHA loan employment and income verification? For starters, it is easy to believe that the income and employment verification processes are the same thing-they aren’t. Borrowers should know that the lender will examine both employment history and income history. Depending on circumstances, that data could help a borrower get closer to loan approval. FHA Loan Rules Require Verification Of Both Income And Employment The lender must verify the basic facts of your employment including how long you have worked with the company, the nature of your pay, whether you have had any promotions or raises, etc. The basic rule for employment verification is that the lender must document two years of your most recent job history, or have documentation of your equivalent time spent in | more...

November 2, 2017

Are There Any Income Documentation Rules For FHA Loans?

By Bruce Reichstein

Are there any income documentation rules for FHA loans? That is what some borrowers want to know when they are ready to fill out a mortgage loan application. What does your FHA lender need to know about your income and employment? The FHA Lender Is Required To Document Your Employment And Income In the FHA loan handbook, HUD 4000.1, your FHA loan officer is instructed to document two years of employment, though that two years is not necessarily required to be with the same company or in the same job position. The lender wants to know your income history, whether you have gotten any raises, or whether recent job changes have resulted in a benefit to you income-wise. FHA Loan Rules Require Independent Verification Of Your Income This means that | more...

Five FHA Home Loan Questions To Ask Your Lender

November 1, 2017

What Do I Need To Get FHA Loan Approval?

By Bruce Reichstein

What do I need to get FHA loan approval? There are several areas that will factor into the lender’s decision to approve the loan, including credit history, time spent working overall, and the dependability of your income. In addition to your credit, employment, and other issues, the property itself must meet FHA loan standards. As you can tell, the issue of FHA loan approval is one that requires some planning and research for you as well as the lender. FHA Loan Approval Is Based On Financial Qualifications Where the borrower herself is concerned, getting an FHA loan approval hinges on three basic things. One is your current ability to afford the loan. Another is your past credit activity and your record as a good credit risk. And the third area | more...

What Credit Score Is Needed For An FHA Mortgage?

October 26, 2017

What Are The Property Requirements For An FHA Loan? Part Two

By Joe Wallace

What Are The Property Requirements For An FHA Loan? We’ve been examining that question in our last few blog posts. FHA loan rules specify that a home must meet minimum standards in order to be approved for an FHA mortgage. What are those standards? There are many, which is why a qualified FHA appraiser must review the property to make sure it is suitable for a mortgage. General Requirements FHA loan rules in HUD 4000.1 state that the home must be generally safe, habitable, and must have a remaining economic life for the entire duration of the mortgage. However, not all homes are in the same condition when they are sold as brand new houses and some homes are purchased under the FHA 203(k) or FHA 203(h) rehab loan programs. | more...