Articles in Category: Special FHA Programs

September 14, 2018

FHA Rehab Home Loans For Disaster Victims

Those living in federally-declared major disaster areas may be eligible for an FHA home loan to replace or repair properties that have been damaged by the disaster such as a hurricane, floods, etc. FHA 203(h) rehab loans are designed specifically for this purpose-the 203(h) disaster loan features no down payment, an FHA FICO score requirement of 500 or higher, and the rehab loan can only be used for principal residences only. That means owner-occupiers only. How does the FHA 203(h) rehab loan work? HUD 4000.1 has the rules for this type of mortgage loan. The FHA 203(h) rehab loan is quite similar to the FHA 203(k) rehab loan which is available to any financially qualified borrower who meets FHA occupancy requirements for the home. FHA rehab loans allow funds to | more...

August 29, 2018

HUD Announces Updated Disaster Policy For Puerto Rico And Virgin Islands Home Owners

By Joe Wallace

In 2017, Hurricanes Irma and Maria devastated many U.S. territories; in the aftermath home owners in Puerto Rico and the Virgin Islands many people are still recovering from the disaster. In August 2018 the Federal Housing Administration (FHA) has announced updates to FHA foreclosure prevention options to allow borrowers with delinquent FHA home loans “easier access to bring their mortgages current without increasing their interest rates or monthly payments” according to HUD.gov. The Federal Housing Administration is also offering a final 30-day extension of its foreclosure moratorium for FHA-insured homeowners in Puerto Rico and the U.S. Virgin Islands. In February 2018, FHA introduced the Disaster Standalone Partial Claim option, intended to help borrowers in the affected disaster areas a way to catch up on pre-disaster mortgage payments without experiencing “payment | more...

May 28, 2018

Happy Memorial Day 2018!

By Bruce Reichstein

Happy Memorial Day! We pause today from our usual posts about FHA home loans, refinance loans, FHA One-Time Close construction loans and related topics to recognize the sacrifices made by our women and men in uniform. Thank you to all who have served-from those who have gone before to those who are about to enter their first year in uniform in service to our country. We return with our regularly scheduled posts on Tuesday. Thank you for reading, and have a safe and happy Memorial Day 2018. We are glad you stopped by!

May 25, 2018

FHA Home Loan Rules For New Construction Appraisals

By Joe Wallace

Borrowers who are interested in having a home built for them from the ground up using an FHA construction loan such as an FHA One-Time Close mortgage or any other type of FHA-guaranteed mortgage loan may wonder what the rules are for appraisals. After all, existing construction appraisal processes are for a home that is ready to sell (although the process may vary if the borrower is applying for certain types of rehab loans). While the appraisal requirements may be generally the same-the home must be safe, habitable, and have an economic life for the entire duration of the mortgage-there are procedural issues that affect new construction properties. With that in mind, appraisals on new construction run a bit differently in some procedural ways than existing construction mortgages; with the | more...

May 22, 2018

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

By Bruce Reichstein

Is United States citizenship required for an FHA One-Time Close / Single-Close construction loan? This issue does not affect all potential FHA borrowers, but it’s a very important one to address, especially given controversy in the news over a variety of societal concerns. Before we get to the specifics of whether or not citizenship is required for an FHA One-Time Close / Single-Close mortgage or ANY type of FHA home loan, refinance loan, or FHA reverse mortgage, it must be noted that FHA home loans are approved on the basis of a borrower’s ability to financially qualify and afford the mortgage. The borrower must be able to legally commit to binding agreements including the loan contract itself, and be of sufficient legal age in the state the transaction is to | more...

May 21, 2018

FHA Loans, Wells, And One-Time Close Construction Loans

By Bruce Reichstein

Borrowers who apply for FHA loans may not be clear on whether or not a property served by a well instead of being connected to the local utility is eligible for an FHA mortgage. Is the presence of a well a problem for FHA loan approval? And what about FHA loan standards for FHA One-Time Close / Single-Close construction loans? HUD 4000.1 contains guidelines for these issues including the acceptability of a property served by a well instead of a water utility. Borrowers will be relieved to know that FHA mortgage rules do not automatically rule out a property just because a well is present, but that well must meet both FHA minimum requirements and any applicable health code or other local ordinances. For One-Time Close / Single-Close construction loans, | more...

May 18, 2018

Maximum Loan Amounts For FHA One-Time Close Construction Loans

By Bruce Reichstein

What is the maximum loan amount you can borrow with an FHA One-Time Close / Single-Close construction loan? The actual dollar amount is not fixed, it depends on variables including the FHA loan limits in a given housing market and whether or not the borrower is buying land in conjunction with the project. Calculating the Maximum Loan Amount For An FHA One-Time Close / Single-Close Construction Loan The FHA loan rules for One-Time Close / Single-Close loans, also known as construction-to-permanent mortgages, are found in HUD 4000.1 and include a breakdown for lenders on how to calculate the maximum mortgage loan. The loan limit takes into account the borrower’s down payment and the Loan-To-Value ratio (LTV). HUD 4000.1, page 445 instructs the lender: “The maximum mortgage amount is calculated using | more...

May 18, 2018

FHA One-Time Close Construction Loans: What’s Required At Closing Time

By Bruce Reichstein

In addition to the usual requirements to close, FHA One-Time Close / Single-Close construction loans (FHA OTC) have some additional FHA documentation requirements borrowers should anticipate. One Time-Close construction loans are more complex than existing construction loans for a few obvious reasons-when a borrower has a home built from the ground with an OTC loan, builders must be paid, there are escrow requirements and procedures which must be followed, and there are unique requirements for this type of loan. Do you know what additional documentation may be required to close the deal? According to page 446 of HUD 4000.1, the FHA loan handbook, the additional documents to close include (but are not limited to) a construction rider, a disclosure agreement related to final inspections, a fully executed contract between the | more...

May 16, 2018

FHA One-Time Close Construction Loans And Other Government-Backed Mortgages

By Bruce Reichstein

House hunters looking for government-backed mortgages (as opposed to conventional mortgages which may have higher down payment requirements and other features) have a variety of options to choose from. Are you in the market for an FHA construction loan such as the FHA One Time Close construction mortgage? Do you need to build instead of buy? FHA One-Time Close / Single-Close Construction Loans Borrowers who choose the FHA One Time Close / Single-Close mortgage are applying for a single mortgage loan covering both the construction phase and the mortgage itself. These loans are for those who want to build a home from the ground up, and there are additional requirements for these loans regarding escrow, inspections, and when mortgage payments are scheduled to being. One Time Close (OTC) loans or | more...

May 9, 2018

One-Time Close Mortgages: Choices To Consider

By Bruce Reichstein

There are many options to consider when planning a One-Time Close (OTC) / Single-Close construction loan. Borrowers who want a home built for them from the ground up can choose between FHA One-Time Close, USDA One-Time Close, and VA One-Time Close construction loans. These are also known as Single-Close loans. These three programs have some basic differences. VA OTC mortgages allow qualified borrowers to apply with no money down. USDA construction loans may also permit the borrower to apply without the expectation of a down payment, but these construction loans are only for rural areas with populations of up to 35,000 according to a 2017 USDA fact sheet about the program. One-Time Close / Single- Close Construction Loans: Occupancy Required Choices between the VA, USDA, and FHA construction loan program | more...