May 1, 2017
FHA loan questions often come in our comments section after we’ve posted on a certain topic. Recently we wrote about how a lender is supposed to verify child support and alimony payments to a borrower who wants to use them as income:
“I applied for a loan and my loan officer said I need proof of continuing payment for the next 3 yrs because my oldest son is 16 but will not graduate high school until after he turns 19. Would my court ordered support papers, my sons school records showing graduation year, and a copy of the law stating that he has to pay until he graduates be good enough proof?”
FHA loan questions like these are proof that there’s still much work to do on explaining how FHA loans work-it’s easy to assume that the FHA loan rule book is the only set of rules that inform the lender’s actions in cases like these. But what’s the reality?
A participating FHA lender has many different sets of guidelines she must follow in order to property approve or deny a borrower’s loan application.
There are a variety of sources including Federal regulations, state law, local ordinances, building code, health authority guidelines, and finally HUD 4000.1, the FHA single-family home loan program rule book. Any one of these may have a say in how the loan is processed, depending on the circumstances. FHA loan rules, in many cases, defer to some or all of the above where applicable.
FHA loan rules often provide certain guidelines which are supplemented by other rules. This is true in many ways, but especially where the appraisal is concerned. But what about the reader’s question?
Specifically, the reader should discuss this question with the loan officer. There are guidelines in HUD 4000.1 that cover this area, but lender requirements will also apply. Those requirements are not found in HUD 4000.1 and the borrower should know that standards can and often do vary greatly depending on the financial institution.
The lender may have requirements above and beyond HUD 4000.1 State law may also have a say in how such issues are to be documented for the purpose of real estate lending. The lender will be able to tell the borrower what is sufficient in that state and at that financial institution. Speaking to the lender also means you’ll have a chance to talk about full disclosure about any other areas the borrower may be uncertain about such as certain fees or expenses that may vary depending on housing market, state law, etc.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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