Articles in Category: FHA Loan Basics

November 2, 2017

Are There Any Income Documentation Rules For FHA Loans? Part Two

Are there any income documentation rules for FHA loans? We have been examining this question, referring to the FHA loan handbook (HUD 4000.1) to see what the lender must do when reviewing a borrower’s income. The lender must calculate the applicant’s debt-to-income ratio using only verifiable income, and there are specific procedures your loan officer must use to do this. Those procedures can vary depending on the nature of your income. Are you salaried, hourly, commission, or contract? Depending on your payment arrangements, the lender must calculate the income accordingly. FHA Loan Applicants With Hourly Income HUD 40001. tells the lender that for hourly income, the loan officer must determine whether the hours of employment vary or not. If they do not vary, the lender can use the current rate | more...

November 1, 2017

What Kind Of House Can I Buy With An FHA Mortgage?

By Joe Wallace

What kind of house can I buy with an FHA loan? Many first time home buyers want to know if FHA mortgages can be used to buy certain kinds of property including condos, duplexes, mobile homes, etc. FHA mortgage loans are flexible enough to purchase many different types of houses depending on the housing market, the lender, and local market standards. Not all FHA lenders will offer all the FHA loan types available to them, so it’s good to ask early if the property type you are interested in is an option. FHA Loans For Typical Suburban Homes The most obvious type of home loan is definitely available for purchase with an FHA mortgage. A suburban home can be existing construction, new construction, or built to suit. FHA loan requirements | more...

October 26, 2017

What Are The Property Requirements For An FHA Loan?

By Bruce Reichstein

What are the property requirements for an FHA loan? There are standards listed in the FHA loan handbook, HUD 4000.1, that all buyers should know. The ability to purchase a home with an FHA mortgage is determined by your credit rating, debt to income ratio, employment, and related factors. But the ability to purchase a specific home will also include standards for the property itself; standards which must be met by the home as-is, or brought into compliance as a condition of loan approval. Basic FHA Loan Property Requirements: Location According to HUD 4000.1, the home must be located within the continental United States, its’ protectorates or territories. A home is eligible to be considered for an FHA loan if it is located in one of the following areas listed | more...

October 24, 2017

How Do I Know If An FHA Loan Is Right For Me?

By Joe Wallace

How do I know if an FHA loan is right for me? If you aren’t sure, consider some of the most important features of an FHA mortgage while making up your mind about the right home loan for you. FHA Loans Have Low Down Payment Requirements FHA mortgage loans have lower down payments than many conventional or other non-government backed mortgages. The minimum down payment for an FHA mortgage is 3.5% of the adjusted value of the home, and FHA loan rules permit you to get down payment help from approved sources. Credit scores play an important part in setting the down payment amount, so you’ll need to discuss your circumstances with your loan officer if you aren’t sure whether you qualify for the lowest down payment, but in general | more...

October 20, 2017

How Many Times In My Life Can I Get An FHA Loan?

By Bruce Reichstein

How many times in my life can I get an FHA loan? If you are buying your first home, this is a question you might not ask until later. But it’s a good idea to know what your options are should you need to sell your first home later and begin a new house hunt. Understanding FHA Loans Knowing that FHA home loans are intended for owner-occupiers who want to use their property as their home address and primary residence helps a lot when trying to understand FHA loan rules. If you don’t plan to use the property you want to buy as your home, you won’t be able to use an FHA single-family home loan to purchase it. There are certain exceptions for government agencies and non-profit groups, but | more...

Time Is Running Out On Exterior-Only FHA Appraisals

October 17, 2017

What Is An FHA Rate And Term Refinance?

By Joe Wallace

What is an FHA rate and term refinance? This refinance loan is different than FHA cash-out refinancing or reverse mortgages. The rules that cover FHA rate and term refinancing are found in the FHA loan handbook, HUD 4000.1, and explains how this type of mortgage differs from the rest. What Are FHA Rate And Term Refinance Loans? HUD 4000.1 defines an FHA rate and term refinance loan as follows: “Rate and Term refers to a no cash-out refinance of any Mortgage in which all proceeds are used to pay existing mortgage liens on the subject Property and costs associated with the transaction.” Who Is Eligible To Apply For An FHA Rate And Term Refinance Loan? HUD 4000.1 explains that “at least one Borrower” named on the original home loan as | more...

October 11, 2017

How Can I Get Ready For An FHA Loan Application?

By Joe Wallace

How can I get ready for an FHA loan application? The process includes some advice you’ve likely heard before (check your credit, make sure you have on-time payments, and avoid new credit applications before you apply for a home loan) but there are other steps to take in the earliest stages of your house hunting journey that can be very helpful. Home Economics Do you know how much it will cost to live in and maintain your home? Utility bills for a house are likely to be higher than for a small apartment. It’s important to start learning what typical utility rates, commuting costs, and other expenses related to owning your home instead of renting. You’ll also want to investigate how much it may cost down the road to repair | more...

Who can apply for FHA Reverse Mortgages?

October 9, 2017

Can I Get An FHA Mortgage For A Home In A Flood Zone?

By Joe Wallace

Can I get an FHA loan for a home in a flood zone? With Hurricane Harvey, Hurricane Irma, and many other natural disasters, it’s logical that someone looking for a home anywhere near these disasters would wonder if their house hunt is going to be affected. FHA loan rules do address flood zones and FHA appraisal requirements for these areas; the answers can be found in HUD 4000.1. The FHA loan rules for this issue can be found under a section covering general property eligibility for an FHA mortgage. On page 143, we learn: “The Mortgagee must determine if a Property is located in a Special Flood Hazard Area (SFHA) as designated by the Federal Emergency Management Agency (FEMA).” “The Mortgagee must obtain flood zone determination services, independent of any | more...

September 28, 2017

Can I Get a Single Family FHA Loan For A Multi-Unit Home?

By Joe Wallace

Can I get an FHA single family loan for a multi-unit home? Some borrowers get confused by the wording in the name of the FHA Single Family Home Loan program. It’s easy to assume that FHA single family mortgages are for one-bedroom houses, but that is definitely not the case. FHA loans are approved for homes that feature as many as four living units-a four unit property can definitely be financed with an FHA loan assuming the borrower is qualified to be approved for the mortgage. One-to-four unit properties purchased with FHA mortgages must be the primary residence of the borrower-you must agree to occupy the home purchased with an FHA mortgage loan usually within approximately two months after loan closing (unless the borrower makes other arrangements with the lender | more...

September 11, 2017

What Should I Know About FHA Home Loan Escrow Account Rules?

By Joe Wallace

What should I know about FHA loan escrow account rules? Depending on the nature of your transaction, lender standards, and other issues, you may be required to use an escrow account to complete or maintain your FHA mortgage. The rules for escrow accounts to be used in FHA loan transactions are found in the FHA loan handbook, HUD 4000.1. The section governing escrow includes guidance that such accounts must be established in accordance with procedures defined in the Real Estate Settlement Procedures Act. The escrow account must be maintained in order to meet monthly financial obligations including the following (where applicable) as found in HUD 4000.1: -hazard insurance premiums; -real estate taxes; -Mortgage Insurance Premiums (MIP); -special assessments, including any assessments related to a PACE obligation; -flood insurance premiums if | more...