Articles in Category: FHA Guidelines

February 24, 2020

FHA Mortgages For First-Time Borrowers In 2020

What makes FHA home loans a great option for first-time home buyers? Anyone purchasing their first real estate, working with a realtor, and getting their credit ready for a home loan for the first time should know about the FHA mortgage program and it’s lower interest rates and flexible income requirements. FHA Loan Guidelines Are More Flexible It’s true that FHA mortgages require a borrower to have two years of employment history. But that history requirement does not have to be with a single company or employer. Borrowers should know that some frequent job changes are acceptable to FHA lenders, but overall your employment record is reviewed on a case-by-case basis when necessary. You may want to explain any unusual job circumstances to a loan officer up front to see | more...

January 29, 2020

HUD Announces New Policy On Service Animals

By Bruce Reichstein

The Department of Housing and Urban Development (HUD) announced updated guidance regarding the use of service animals and emotional support animals as it relates to Fair Housing Act issues. The issue of support animals might not seem to be related to the purchase of real estate with an FHA home loan, not at first. But Fair Housing rules do affect all stages of the house-hunting process including renting a home while you are looking for one to purchase with the help of a realtor, or on your own. The HUD announcement discusses a need for reasonable accommodation in housing for those who need service animals or emotional support animals. The agency has released an “Assistance Animal Notice” designed to help all parties understand how to best comply with Fair Housing | more...

January 23, 2020

FHA Loan Rules You Need To Know Before House Hunting

By Bruce Reichstein

There are several things you should know about FHA home loans before you go looking for real estate to buy. You can save a LOT of time and even some money by taking extra time to consider the following issues. You Don’t Have To Buy An Existing Home FHA home loans have an option called the One-Time Close construction loan. It lets you build a home from the ground up on your own land. Don’t want to purchase existing real estate? There is an FHA home loan for that and it is offered even to first-time home buyers. The same low 3.5% minimum down payment is available to those who qualify with credit scores and other financials. You Don’t Have To Buy A Suburban Home With An FHA Mortgage Don’t | more...

December 18, 2019

FHA Home Loan Appraisals: What You Should Know

By Joe Wallace

Borrowers have plenty of questions about the FHA appraisal process. After all, if the appraisal doesn’t go well, it could mean the borrower has to decide whether to walk away and find something else or deal with the issues uncovered by the appraisal. What is the real issue with FHA appraisals that confuses many borrowers? The fact that there are multiple standards that must be met and not just the ones that are set by the FHA and HUD. House hunters write us frequently to ask if a certain appraisal issue will affect their home loan. And the simple answer is that there is no easy answer to appraisal questions because of one huge variable. And that variable is what state and local building code requirements say in addition to | more...

December 10, 2019

Higher FHA Home Loan Limits For 2020

By Bruce Reichstein

In 2019, the FHA and HUD announced higher loan limits, giving borrowers in most counties additional borrowing power to purchase, build, repair, or refinance an owner-occupied home. The uptick in FHA loan limits for 2019 led some to believe that it might be possible to see another year of higher loan limits, while others speculated that higher limits may not be a trend, but simply a typical course correction for home loan limits. Regardless of which camp 2020 borrowers were in back then, it seems there is another year to contemplate higher loan limits; the Department of Housing and Urban Development has released the FHA loan limits for 2020 and they are indeed higher in most areas. The HUD announcement discussing the overall increase in the FHA loan limit for | more...

November 7, 2019

FHA Loan Rules For Appraisals: Appliances, Mechanical Systems In The Home

By Joe Wallace

HUD 4000.1, the FHA Single-Family Loan Handbook, has a detailed section about FHA loan appraisal requirements. First-time home buyers may not realize that certain details of the home must meet FHA requirements such as the condition of appliances and the efficiency of the mechanical systems in the home such as central air conditioning or hot water heaters. HUD 4000.1 lists FHA requirements for appliances in the appraisal, stating that the FHA appraiser is required to review the home’s stove, fridge, washing machine, etc. if those appliances are being left in the home for the new owner. “Appliances that are to remain and that contribute to the market value opinion must be operational. ” This section is discussing appraisals for existing construction homes, but the intent is clear; the condition of | more...

October 10, 2019

New Housing Appraisal Rules? Not So Fast, FHA Loans

By Joe Wallace

If you haven’t paid attention to recent headlines in the mortgage finance sector, you may not be aware that starting October 9, 2019, some house sales priced at or below $400,000 no longer require an appraisal. That news has some house hunters and home sellers jumping for joy. At least at first. Since the mid 1990s, appraisals have not been required for each and every home sale. Homes priced at or below $250 thousand may or may not have required an appraisal (more on that below), but over time, the numbers have shown that home prices have gone up significantly since then. Hence the move to change the appraisal threshold. The FDIC, in partnership with two other government agencies issued the proposal to increase the appraisal limit, the rule was | more...

October 4, 2019

FHA Home Loan Rules For Mixed-Use Properties

By Joe Wallace

FHA Single-Family home loans are designed for those who want to be owner-occupiers. Those looking for affordable housing often turn to FHA mortgages to buy condos, mobile homes, town houses, and typical suburban houses. But there is also the potential to purchase mixed-use properties with an FHA mortgage as long as those homes meet FHA standards, lender requirements, local zoning, and local building code requirements. What are the rules for buying a mixed-use property? To start, the nature of the real estate must be primarily residential in nature. The non-residential use of the home cannot detract from its’ use or status as a dwelling. The FHA Single Family home loan handbook, HUD 4000.1, starts in this area by formally defining what it considered to be a mixed-use property and the | more...

September 18, 2019

Will FHA Loans Let Me Rent Out My Home?

By Bruce Reichstein

Will FHA loan rules allow you to rent out the property you purchase with an FHA mortgage? There are many who wish to buy a home to start working as a landlord, but if you wish to do this with an FHA mortgage, there are certain restrictions you will need to know before you commit. Many home loans have specific requirements; a borrower may be permitted to buy an investment property with certain kinds of home loans (not FHA) but the trade off may be higher interest rates, more restrictive terms and conditions (depending on the lender), and penalties for early payoff of the mortgage. Being a Landlord With An FHA Home Loan With an FHA home loan, you are permitted to be a landlord as long as you occupy | more...

September 11, 2019

FHA Mortgages In Special Flood Hazard Areas

By Bruce Reichstein

The FHA lender’s handbook, HUD 4000.1, has instructions for the lender to make sure properties to be purchased with an FHA mortgage aren’t located in certain zones. The lender is also tasked with insuring that if the home is located within certain flood hazard areas that the appropriate hazard insurance is obtained as a condition of loan approval. One such zone is the Special Flood Hazard Area or SFHA. HUD 4000.1 instructs the lender to insure that a home is located in an SFHA as declared by FEMA. “The Mortgagee must obtain flood zone determination services, independent of any assessment made by the Appraiser to cover the Life of the Loan Flood Certification” where applicable. But in general, there are some areas where an FHA mortgage simply is not possible | more...