Articles Tagged With: FHA Closing Costs

November 4, 2013

FHA Loan Income Requirements: A Reader Question

A reader asks, “I have a question about the FHA 3.5 percent down program. I know my scores are all in the high six’s lowest 637 highest 677 , I was told that I qualify for the loan but when push came to shove, I was told I needed my net income to be almost 4 times what i make now. What is or are the financial requirements to qualify for the program? Also, I am self employed and have been for over 5 years. I presume the rules vary from lender to lender, state to state, etc…I need to know if this lender purposely made up this story just to ‘show me the door’ so to speak.” We can’t speak for a lender’s intentions, so we’ll skip the last | more...

October 31, 2013

FHA Loan Mortgage Insurance: A Reader Question

By Joe Wallace

A reader asks, “Veterans are not required to purchase mortgage insurance with a VA loan. Is there a way that a veteran can be exempt from the mortgage insurance premium? The mortgage insurance is very high.” The short answer to this reader question is “no”. FHA loans are not designed the same way that VA home loans are–FHA loans require a Mortgage Insurance Premium (MIP), where VA home loans do not. Veterans should consider their options between VA home loans and FHA mortgages carefully. In some cases a veteran or currently serving military member could choose an FHA loan over a VA mortgage, for a variety of reasons. But a borrower faced with these choices should make the most informed decision possible. FHA home loans do have certain similar features | more...

October 28, 2013

FHA Back to Work Program Counseling–Where To Find It

By Joe Wallace

Ever since we posted about the FHA’s Back to Work program for borrowers who have experienced “Economic Events” or financial hardship and lowered credit ratings as a result of the recession, we’ve gotten a number of important questions about the program. According to one of our original posts on the new FHA program, “Back To Work, according to FHA Mortgagee Letter 2013-26, lets lenders evaluate these Economic Events to see if the borrower may still be a good credit risk for an FHA loan. “FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage. To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can | more...

October 25, 2013

FHA Loan Applications: What Borrowers Need To Have Ready

By Joe Wallace

When you’re getting ready to fill out an FHA loan application, knowing in advance what documentation you’ll need to get the process moving forward can be a big help. There are individual lender requirements that you’ll need to get directly from your loan officer, but the FHA loan rulebook (HUD 4155.1) lists some things the FHA requires as part of the process the lender uses to verify your employment, income, and credit data. The list of documentation includes (but may not be limited to) the following list found HUD 4155.1 Chapter One Section B: general mortgage credit analysis documents evidence of Social Security Number verification of deposit verification of employment (VOE) alternative employment documentation appraisal documentation. FHA loan rules in Chapter One say, “Lenders must obtain the most recent documents | more...

October 24, 2013

FHA Updates Guidance For Superstorm Sandy Repairs Under 203(k) Loan Program

By Joe Wallace

Just as the government shutdown crisis was unfolding, the FHA was preparing an update to policies that affect borrowers who need to apply for FHA 203(k) mortgages as part of their recovery from Super Storm Sandy. Unfortunately, that press release likely got overlooked by many because of the government shutdown issue. That update, as described in FHA Mortgagee Letter 2013-36, titled, “Eligible Properties in Presidentially Declared Major Disaster Area Super Storm Sandy for 203(k) insured mortgages” describes some very important updates. These updates specifically pertain to those seeking FHA 203(k) loans in areas affected by Sandy–they do not apply to other borrowers outside this area. According to the mortgagee letter, “Handbook 4240.4 Section 1-4 currently states that, homes that have been demolished, or will be razed as part of the | more...

October 22, 2013

FHA Loans After Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “What is the length of time after filing bankruptcy that you have to wait to qualify for a FHA loan…during that waiting process, what are some of the things that I should be doing to make the approval process easier and making my credit better?” FHA loan rules and lender standards are both considerations in situations like these, as is the specific circumstances of the individual’s bankruptcy and other credit issues. Borrowers should know that FHA minimums are just that–minimums. Lenders can and often do require higher standards. That’s why it’s important to consider shopping around for a lender who may be more willing to work with you–one lender may not be able to help, while another can, depending on your situation. For the record, FHA loan | more...

October 18, 2013

FHA Loans and Credit Disputes: A Reader Question

By Joe Wallace

A reader asks, “My plan is to buy the house I’m leasing, my 3 scores are 616, 621 and 619. Will I qualify for an FHA loan? I have a student loan that i haven’t paid on my credit report it states its on dispute, will this disqualify me from an FHA?” The answer to this question depends greatly on what is meant by the “unpaid” student loan. Does that mean the borrower has not made any payments? Or does that mean payments are being made but the loan hasn’t been paid in full? Are there missing or delinquent payments in dispute? When there are disputed items on a credit report, the lender is required to learn more in order to process the FHA loan application. FHA loan rules found | more...

October 17, 2013

FHA Loans and the Government Shutdown: A Reader Question

By Joe Wallace

*UPDATE** The government shutdown has ended for now as of Wednesday night October 16 2013, but the advice in this post is sound, regardless. There could easily be another government shutdown if conditions repeat themselves in the next round of negotiations over the Federal budget when the current plan expires next year. If there is another government shutdown, the advice in this post will be good to know for affected FHA borrowers. A reader asks, “I am a seller of a home that was suppose to close Oct 1. We still have not closed as of Oct 12. My buyer’s financial company is saying it is due to the government shutdown. Everything I read says it should not be held up. How does my buyer find out what is going | more...

October 16, 2013

FHA Loan Rules For Non-Purchasing Spouses

By Joe Wallace

One common FHA loan question has to do with the status of a non-purchasing spouse. Can a married borrower apply for an FHA loan with a non-purchasing spouse? In such cases would the income or credit history of the non-purchasing spouse be considered as part of the loan application? The answer depends greatly on the state laws where you live, or the state laws in the area where the home is to be purchased. According to the FHA loan rules found in HUD 41551., Chapter Four: “If required by state law in order to perfect a valid and enforceable first lien, a non-purchasing spouse may be required to sign either the security instrument or documentation indicating that he/she is relinquishing all rights to the property. When the security instrument is | more...

October 10, 2013

FHA Loans For Building on the Borrower’s Own Land Part Two

By Joe Wallace

A reader asked us recently about FHA loans for building on land the borrower already owns: “…My end goal would be to demolish (the original) house and build a completely new one in its place for us to all reside in…what I am wondering is does this kind of demolish and rebuild qualify for FHA loans and with me having to move to do this what kind of eligibility would I have for FHA loans.” The rules for FHA loans where construction would happen on land the borrower already owns can be found in HUD 4155.1, Chapter Two. FHA loan rules allow new purchase loans for single family homes when the borrower wants to build on his or her own land. According to Chapter Two, “A borrower is eligible for | more...