Articles in Category: Special FHA Programs

August 17, 2020

Building A Home, Buying A Home

Are you thinking about buying an existing home? Are you considering applying for a construction loan to build a house on your own lot instead? If you are trying to decide whether to build or buy, there are questions to ask before you commit to buying an existing construction property, or choose to apply for a One-Time Close mortgage to build on land you already own or purchase as part of the mortgage. What does it take to select the best option for your needs? There is an advantage to building a home from scratch–borrowers can influence the final outcome of the construction and help determine the nature of the house ahead of time. Some don’t enjoy sorting out such details, they gravitate toward the idea of looking at existing | more...

August 13, 2020

FHA Announces Changes To 203(k) Rehab Loan Rules During COVID-19

By Joe Wallace

The FHA and HUD have announced changes to the FHA 203(k) Rehabilitation Mortgage program to help borrowers affected by coronavirus issues. Some who started rehab loan construction work may have had income issues related to COVID-19; such borrowers are offered additional consideration to keep their projects moving forward to completion. The Rules As They Were Originally Written An FHA Mortgagee Letter announces the availability of an extension for borrowers who could not get their rehab loan construction projects completed on time. The original guidance in HUD 4000.1 makes provisions for this; it states that when the work is not finished in the agreed-upon time, “the Borrower may request an extension of time and must submit adequate documentation to justify the extension.” HUD 4000.1 also states that the lender normally grants | more...

August 10, 2020

FHA One-Time Close Loan Rules: Buying Land To Build On

By Joe Wallace

You can build a home on your own lot, even as a first-time home buyer. Thanks to the FHA single-family loan program, which includes a construction loan option, you can build a home instead of buying an existing construction house AND take advantage of low FHA loan down payment requirements. FHA loan rules require only a 3.5% down payment even for construction loans, making the option to build instead of buy within reach of many who are just now exploring their options for becoming a home owner. But when considering a construction loan it’s good to remember that you don’t have to own land already–not all construction loan borrowers own their own property and need to purchase the lot as part of the loan. Building Your Home With A Construction | more...

August 6, 2020

Who Should Apply For A Construction Loan?

By Bruce Reichstein

Who should apply for a construction loan? There are two basic types of borrowers who should consider doing so–the house hunter who wants to build a house instead of buying someone else’s, and those who want to purchase fixer-upper homes and renovate them. The home loan for borrowers who would rather build their home on their own lot is called a One-Time Close (OTC) construction loan. It features a single loan application for both the construction of the house and the purchase of it once completed. Non-OTC construction loans may required two separate loans–one for the construction phase and one for the purchase of the completed house. This makes the process more complicated and having a single loan is definitely an advantage for the OTC version of these mortgages. OTC | more...

August 3, 2020

Time Is Running Out For FHA Mortgage Loan Relief

By Bruce Reichstein

Under the CARES Act passed in 2020 to help financially stricken Americans, all government-backed mortgages had foreclosure-avoidance measures instituted to protect homeowners from losing their homes during COVID-19. Those with VA, USDA, and FHA mortgages had all foreclosure actions suspended until the end of August 2020; the CARES Act forbids lenders and loan servicers “from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale”. That foreclosure protection started March 18, 2020 but under the current version time is running out to act–these protections expire August 31, 2020. Those who have a financial hardship due to the coronavirus pandemic, may request an FHA loan forbearance for up to 180 days and an extension for an additional 180 days is also offered. This is NOT | more...

July 29, 2020

HUD Announces Extended COVID-19 Guidelines For Self-Employment Income Approval

By Bruce Reichstein

The FHA and HUD have announced an extension to some of its’s temporary coronavirus measures created to help participating lenders approve FHA home loans. This announcement was made in a group message containing other guidelines with changes via a “multisubject mortgagee letter” by HUD in the last week of July 2020. “COVID-19 Multisubject: Updated Temporary Guidance for Verification of Self-Employment; Rental Income; 203(k) Rehabilitation Escrow Account” is a HUD mortgagee letter with updates that affect FHA loan rules for applicants trying to qualify for an FHA mortgage with self-employment income. There are other updates for those who want to purchase a home using rental income to qualify–we’ll explore that information in a future blog post. The measures announced in the FHA mortgagee letter are not permanent; it’s part of a | more...

July 27, 2020

One Time Close Mortgage Loans: The Base Home Sales Price

By Bruce Reichstein

There are home loans for borrowers–even first-time home buyers–to allow the construction of a home from the ground up. They are called One-Time Close construction loans and are available from participating FHA, VA, and USDA lenders. One Time close loans, also known as single-close construction loans, feature one loan for both the construction of the home and the purchase of that home. When you apply for a construction loan, one area you’ll soon learn about is something called the base home sales price. This is essentially the base cost of the project using the contractor’s standard designs and features–you choose the design and features and those choices generate a base price. Choosing Features, Materials, Design How do these choices affect cost? Consider the design itself. What is the cost of | more...

FHA One-Time Close Construction Mortgage Basics

July 19, 2020

FHA One-Time Close Construction Loan Rules

By Bruce Reichstein

What do borrowers need to know about FHA One-Time Close construction loans? There are two very important areas to keep in mind. One involves the lender’s specific requirements to qualify for this single-close construction loan, and the other involves FHA loan rules. The two are not always identical and this is something to be aware of when going into the loan application process. FHA One-Time Close mortgages are different than existing construction loans because the home must be designed, built, and paid for from the ground up and there are varying time frames under which this will be done. Purchasing an existing construction home means getting to move in much more quickly, but the trade-off is that you are purchasing someone else’s home rather than having one built especially for | more...

July 9, 2020

FHA and HUD Announce Even More Home Loan Relief Options For Qualifying Home Owners

By Joe Wallace

Millions of home owners were affected by a loss of income and employment at the start of the COVID-19 outbreak in America. And there was a lot of money on the table in the form of mortgage relief and stimulus payments, but what happens when the stimulus money is gone and the borrower gets to the end of a home loan forbearance period? The FHA and HUD have announced extended relief for FHA borrowers -relief specifically designed to help those who applied for FHA loan forbearance. A press release titled, “FHA Expands Home Retention Measures For Homeowners Financially Impacted By Covid-19” announces the measures, which are meant to help home owners bring their mortgage up to date at the end of the loan forbearance period. As of July 8, 2020, | more...

June 30, 2020

HUD Extends Modified Exterior-Only Appraisals During COVID-19

By Bruce Reichstein

The World Heath Organization says “the worst is yet to come” with regard to the global coronavirus pandemic; the Department of Housing And Urban Development responded to COVID-19 quarantine measures in March 2020, eliminating a requirement temporarily to suspend in-person or indoor appraisal activity. Those changes temporarily meant FHA appraisals would not be subject to a requirement for in-person appraisals that might run in violation of community social distancing policies. The appraisal policy (as well as modified employment verification requiremets for certain loans). But that was all set to expire (more than once, as we’ll read below) until HUD acted to extend these measures anew. Now, with COVID-19 hot spots in the forefront of American news headlines, HUD has extended the modified appraisal guidelines (as well as employment verification rules)–they | more...