Articles in Category: FHA Guidelines

October 24, 2017

How Do You Qualify For An FHA Loan?

How do you qualify for an FHA loan? Many want to know what it takes to get approved for an FHA mortgage, and you may be surprised to find out that FHA mortgage loans have more forgiving minimum requirements than other types of home loans. Lender standards will apply above and beyond FHA minimums depending on the financial institution and other factors, but in general FHA mortgages are designed to be more affordable and more forgiving where credit qualifications are concerned. Qualifying For An FHA Mortgage To begin, only owner-occupiers are allowed to get FHA loans. You can’t buy an investment property with an FHA mortgage unless you are a non-profit or a government agency (generally speaking). If you intend to purchase property you will live in as your home | more...

FHA One Time Close Construction Loan Option

October 23, 2017

FHA One-Time Close Construction Loan Requirements

By Bruce Reichstein

FHA One Time Close / Single Close construction loan requirements include different FICO score, escrow, and closing requirements than standard new purchase mortgages. Do you know how FHA One Time Close construction loans work? A Single Loan For The Entire Process Construction loans typically require two loans-one to purchase, and one to pay for the construction. Under the FHA One Time Close construction loan program, also known as an FHA construction-to-permanent mortgage, there is a single loan. This prevents the need for a borrower to be credit-qualified twice during the lending process. The procedure for an FHA One Time Close loan has the loan closing first, in order to pay for the land, followed by the construction phase. That means an escrow account is required in order to disburse funds | more...

October 16, 2017

Can I Buy Another House With An FHA Loan?

By Joe Wallace

Can I buy another house with an FHA loan? It’s a question on the minds of many, especially those who might be concerned that NOT being a first-time home buyer might disqualify them from the FHA loan option. Is this true? FHA Loans Are Not Just For First-Time Home Buyers FHA mortgage loans are designed to be an affordable option for anyone who is financially qualified to be approved for a home loan. That means that you do not have to be a first-time home buyer, you don’t have to be “in need” to qualify, and you don’t have to worry about an income limit for FHA mortgages. FHA loans are approved on the basis of a borrower’s creditworthiness and ability to afford the loan. There is no maximum income | more...

October 13, 2017

What Are The Interest Rates On FHA Mortgage Loans?

By Joe Wallace

What are the interest rates on FHA mortgage loans? This is a question that can be tough to answer because there are variables involved. Some of those variables are with the lender, but some are associated with the borrower. FHA Interest Rates Are Not Set By The FHA One very important aspect of FHA loans to be mindful of; the FHA and HUD do not set or regulate the interest rates on FHA mortgage loans, refinance loans, or loan assumptions. Interest rates will be negotiated between the lender and the borrower. FHA Mortgage Loan Interest Rates Are Not The Same For All Borrowers FHA loan interest rates, like other mortgage loan rates, are determined in part by market forces, but also by the borrower’s financial qualifications. The greater credit risk | more...

October 9, 2017

FHA Mortgage Rules For Homes In A Flood Zone

By Bruce Reichstein

In a previous blog post we discussed some of the FHA loan rules for purchasing homes that may be located in flood zones. According to the FHA loan handbook, homes in certain types of flood zones or Special Flood Hazard Areas are not eligible for FHA mortgages (including but not limited to SFHA Zone A, a Special Flood Zone Area, or Zone V). But other properties may be eligible. FHA loan rules for homes that are in a flood zone but are still eligible for an FHA mortgage vary depending on the type of property. Let’s examine the rules for each: Proposed or New Construction Homes HUD 4000.1 says of these properties: “If any portion of the dwelling, related Structures or equipment essential to the value of the Property and | more...

October 3, 2017

What Are The FHA Appraisal Rules For Appraisal Transfer?

By Joe Wallace

What are the rules for FHA appraisal transfer? There are times when a borrower wants to switch lenders, and there may be other circumstances that may lead to the question of transferring an existing FHA appraisal. FHA Appraisals And Borrowers Who Switch Lenders FHA loan rules in HUD 4000.1 directly address the question of what happens to the FHA appraisal if the borrower changes her mind and decides to use a different lender. “In cases where a Borrower has switched Mortgagees, the first Mortgagee must, at the Borrower’s request, transfer the appraisal to the second Mortgagee within five business days.” Notice that the FHA loan rules here say “at the borrower’s request”. The transfer of the appraisal is not automatic, and the FHA appraiser is not required “to provide the | more...

October 3, 2017

How Long Are FHA Appraisals Valid?

By Bruce Reichstein

How long are FHA appraisals valid? That can be an important question, especially in situations where there might be a delay in the processing or closing of a home loan for some reason. FHA loan rules governing the appraisal process are found in HUD 4000.1, the FHA loan handbook. In that handbook, there is a general rule for the age of documents used to process the mortgage. According to that section on page 107, we learn: “Documents used in the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity for underwriting purposes is not affected by the passage of time, such as divorce decrees or tax returns, may be more than 120 Days old at the Disbursement Date.” | more...

September 21, 2017

Do I Need The Consent Of My Non-Borrowing Spouse To Get An FHA Mortgage?

By Joe Wallace

Do I need the consent of my non-borrowing spouse to get an FHA mortgage? That’s an important question, and the answer varies depending on the laws of your state. The rules governing this issue are found in the FHA loan handbook, HUD 4000.1. The section answering this question is short, but the implications will vary, again, depending on state law. But why? FHA home loans and other major lines of credit are often affected by state laws, including what are known as “community property laws”. If you reside in a community property state, that means that state law dictates how the debts incurred in a legal marriage are viewed legally. In community property states, spouses share the financial responsibility for all debts incurred for the duration of the legal marriage. | more...

September 12, 2017

Can I Use Disaster Relief For My FHA Loan Down Payment?

By Joe Wallace

Can I use disaster relief for my FHA loan down payment? That question is on the minds of many in the wake of hurricanes, forest fires, and other natural disasters. FHA home loans have a minimum required investment or down payment of 3.5% of the adjusted value of the home. Depending on circumstances including marginal credit scores, some transactions may require a higher down payment. But the down payment is required no matter what, and FHA loan rules state the down payment must come from approved sources. That means a borrower will be required to furnish the lender with information about the source of the FHA loan down payment. Borrowers can use cash saved at home, money from investments or savings clubs, even gift funds from approved sources. Those approved | more...

September 11, 2017

Can I Use A Power Of Attorney At FHA Loan Closing Time?

By Bruce Reichstein

Can I use a power of attorney when it comes time to close my FHA loan? That may not be a common question per se, but for those this issue affects, the answer can affect how the entire closing process is handled. There are many reasons why a power of attorney might be needed to close a legally binding financial transaction such as an FHA mortgage. A borrower may be called away for an urgent work or family need, military duty could prevent the borrower from being physically present, injury or illness, etc. FHA loan rules address the power of attorney issue in HUD 4000.1, which begins on page 345 by stating: “A Borrower may designate an attorney-in-fact to use a Power of Attorney (POA) to sign documents on their | more...