Articles in Category: Special FHA Programs

July 14, 2022

HUD Announces Appraisal Update

The Department of Housing and Urban Development official site contains an FHA Mortgagee Letter published on July 12, 2022, which announces an important update to FHA appraisal policy. FHA loan rules as published in HUD 4000.1, include a maximum age for an appraisal. If an appraisal is about to expire, FHA rules permit an extension of the appraisal validity period for 30 additional days. In some cases, an appraisal update may be permitted but that update must typically be accomplished before the original appraisal expires. Now, FHA appraisal guidelines have been revised to expand the appraisal validity period, which the FHA and HUD say will reduce “financial burdens” of getting appraisal updates. The changes are also meant to help the agency “more closely align” the FHA loan program’s initial appraisal | more...

July 11, 2022

FHA Adds New Income Flexibility Guidelines For FHA Borrowers Affected By COVID-19

By Joe Wallace

During the global COVID-19 pandemic, many house hunters experienced a loss of income because of coronavirus-related employment gaps, job losses, and similar financial hardship. When you are applying for a mortgage loan, late and missed payments can have a negative effect on your ability to find an affordable home loan. There were many forms of relief for COVID-19-related economic hardship, but as the fallout from COVID continues, it’s clear that some additional measures are needed. That’s one likely reason the FHA has announced updated COVID-19 credit qualifying guidelines for borrowers trying to buy a home with an FHA mortgage. In early July 2022 the FHA announced new guidelines for participating FHA lenders. These new guidelines permit more flexibility for the lender when qualifying a borrower who may have income or | more...

July 6, 2022

VA One-Time Close Construction Loan Options for Military Veterans Expanded

By Bruce Reichstein

Some house hunters get fed up with looking for just the right home, while others start out their home loan journey knowing in advance they want a house built for them. What options do these borrowers have? There is an FHA home loan known as the FHA One-Time Close / Single-Close construction loan that lets borrowers apply for a single loan that covers both construction costs and the mortgage itself. The FHA version of this type of construction loan requires the borrower and lender to work together to establish a plan for the project including estimated completion times, interest rates, budgets, and more. Some borrowers aren’t interested in FHA home loans since they have other options; do qualifying military veterans have a VA loan version of the FHA One Time | more...

One Time Close Mortgage Loans: The Base Home Sales Price

June 23, 2022

Why Choose An FHA Construction Loan?

By Bruce Reichstein

If you want to build a home on your own lot or on land you buy in conjunction with the project, you have two basic options to choose from. There is a type of construction loan that features two applications and two closing dates. One is a loan to pay for the labor and materials in the construction of the property itself. Once the construction phase is over, the borrower applies for a second loan that pays off the construction loan and serves as the mortgage. It is important to remember that the loan for building your house is not a 30-year mortgage. If you want to build a custom home this way, the first loan is sometimes called an interim loan with the second being referred to in the | more...

One-Time Close Construction Loan Options For Veterans

June 9, 2022

Questions To Ask About FHA Construction Loans And 203(k) Rehabilitation Loans

By Joe Wallace

There are FHA mortgages that let you build a home from the ground up on land you already own or purchase in conjunction with the mortgage. These are called FHA One-Time-Close mortgages. There are also FHA loans that can help you buy and renovate a home. These are called FHA 203(k) Rehabilitation loans and they are also available as an FHA refinance option. Both types of loans will require you to use escrow, hire builders, and have custom work done. And if you have never done this before, there are a few things to know going into the process. Did you know that not all builders are suitable for construction loans? Not every licensed contractor has experience with a large project such as a home renovation, and you will want | more...

Home Loans For Building On Your Own Land

May 24, 2022

Building Your Home Instead Of Buying Someone Else’s House

By Bruce Reichstein

If you want to build your home from the ground up on your own lot, you have plenty of options, starting with a choice between a construction loan with two applications, two loans, and two closing dates and a loan that only has a single application, one loan, and one closing date. The loans that require only one application and closing date are known as One-Time Close construction mortgages. They are also known as construction-to-permanent mortgages. The loans that require two of everything are simply known as construction-only loans and you must apply for the mortgage loan separately from the construction loan. What are the basic benefits of choosing a One-Time Close loan aside from the obvious? Your ability to have single loan approval and one closing date are important. | more...

May 13, 2022

Reasons To Refinance With An FHA Mortgage In 2022

By Bruce Reichstein

There are many reasons to consider refinancing a home loan with an FHA mortgage. Some aren’t as attractive in times when interest rates are moving higher, and others may require a refinance no matter what the rates are doing. Recovering from financial or natural disasters can bring a homeowner back to the lender to discuss options for saving a home through refinancing as one possible option. In the spring of 2022 when inflation and other issues contributed to rising interest rates, cash-out refinancing may not be on the table in the minds of those worried about a continued rise in rates. But some homeowners affected by the pandemic who are struggling to make their mortgage payments or struggling to keep up due to the long-term financial effects of COVID-19 on | more...

FHA Construction Loan Rule Changes In 2021

May 10, 2022

FHA One-Time Close Construction Loans: Buying And Owning Land

By Bruce Reichstein

With an FHA One-Time Close construction loan, you have the ability to build a home on your own land instead of purchasing someone else’s house. There are two kinds of borrowers for these construction loans, those who already own land and those who do not. Some might wonder if they are left out of the FHA construction loan option simply because they don’t own a parcel of land yet. The good news is that FHA One-Time Close loans allow you to apply for a loan to buy the land as well as build the home. You’ll find that it may be easier to qualify for an FHA One-Time Close loan than a conventional equivalent, but keep in mind that you may have certain closing costs that aren’t applied with certain | more...

April 19, 2022

FHA Adds 40-Year Mortgage Relief Option

By Joe Wallace

The Federal Housing Administration has announced a 40-year mortgage modification option for borrowers who are struggling to save their homes due to COVID-19. The announcement will have lenders offer more options to those who are behind on FHA Title II loans, which are the mortgages most commonly used under the FHA loan program to buy primary residences with. The new 40-year option is meant for those who “cannot achieve a minimum targeted 25 percent reduction in the Principal and Interest portion of their mortgage payment through FHA’s existing 30-year mortgage modification with a partial claim” according to the press release. Over time, the FHA and HUD have made major changes to the COVID-19 homeowner relief choices offered to those with FHA mortgages. According to the FHA and HUD, adding the | more...

February 2, 2022

HUD Announces More Funding For Areas Hit By Natural Disasters

By Bruce Reichstein

The Department of Housing and Urban Development has been very busy in 2021 and 2022 responding to natural disasters and announcing the latest federal disaster assistance in areas hardest hit by storms, fires, flooding, and more. Homeowners in federally-declared disaster areas soon learn about the FHA’s foreclosure moratoriums and options for recovering damaged or destroyed homes using FHA 203(h) and FHA 203(k) Rehabilitation Loans (amongst multiple options). Now, HUD has announced further assistance for current and future disaster areas in the form of “Allocations for Community Development Block Grant Disaster Recovery” plus the start of something called CDBG-DR Consolidated Waivers and Alternative Requirements Notice.” That notice is described by the HUD press release as being “ a critical step taken by the department to open access to more than $2 | more...