Articles Tagged With: Credit Requirements

August 24, 2012

FHA Loans For Disaster Victims: The 203(h) Program

With all the natural disasters in the news lately, plus areas with federal natural disaster declarations in Wisconsin, Maryland, and Montana counties, it seemed like a good time to discuss the FHA 203(h) loan program for disaster victims. The FHA/HUD official site summarizes the FHA 203(h) program as follows; “The Section 203(h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.” Not everyone can apply for this particular FHA home loan program. According to FHA.gov, “Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes | more...

August 21, 2012

What Are My Chances For An FHA Loan? Reader Questions

By Joe Wallace

A reader asks, “I have good credit but my wife had a delinquent student loan. It is now up to date for the past two months. We only have two car payments, never been late. We also have (a) home in another part of the state since my job transferred me to a different city. What are the chances of us getting a loan?” Questions like this are hard to answer for several reasons–one of which is the reader doesn’t provide any credit score information. FHA home loans require the borrower to have a minimum credit score. In general, borrowers should not expect an FHA loan unless their credit score is at least 580 or better, and many lenders won’t approve a loan for borrowers with credit scores lower than | more...

August 17, 2012

FHA Loans and Employment Verification

By Joe Wallace

When you apply for an FHA mortgage loan, you’re required to list your employment history so it can be verified before loan approval. For borrowers who have had steady jobs with the same employer for two years or more, this isn’t a great cause for concern. Borrowers who have changed jobs more frequently than that may be worried that their job history might work against them on the FHA loan application. Is this fear grounded in reality? Or does the FHA make provisions for borrowers with recent job changes, a history of seasonal employment or other issues? According to the FHA loan rules found in HUD 4155.1, these issues are circumstantial and must be reviewed on a case-by-case basis to avoid discriminating against legitimate, qualified FHA borrowers who happen to | more...

August 8, 2012

Veterans and FHA Loans: The National Housing Act

By Joe Wallace

A reading of the VA Lender’s Guide, which establishes rules for lenders processing home loans for qualified veterans under the VA Loan program, reveals an interesting section titled, “Certificate of Veteran Status – FHA Loans”. Modified on April 6, 2012 to make minor grammatical edits, this section of the VA loan rulebook pertains directly to veteran borrowers who seek FHA guaranteed home loans. According to this portion of the VA loan rulebook, “General Section 203(b)(2) of the National Housing Act permits a veteran to obtain slightly better terms than a non-veteran when obtaining Federal Housing Administration (FHA) mortgage financing. Although this involves FHA loans, VA is charged with making the entitlement determination for benefits under this provision.” How does the VA accomplish this? “VA will issue a VA Form 26-8261, | more...

July 31, 2012

FHA Loan Rules: Owner Occupancy

By Joe Wallace

A reader asks, “When applying for an FHA loan, how long must I live on the property?” Assuming the reader wants to know how long he or she must own the home before it can be sold, borrowers with this question should know there FHA loan rules that do apply to occupancy and how long a seller has owned the property. For example, HUD 4155.1 Chapter Four Section B contains the FHA Requirement for Establishing Owner Occupancy, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower

July 27, 2012

How Do FHA Loans Differ From Conventional Mortgages?

By Joe Wallace

FHA guaranteed home loans differ from conventional loans in many ways. The required down payment for FHA home loans is often lower (a minimum of 3.5% down is required, where conventional mortgages may ask higher down payments). FHA home loans feature no penalty for early payoff, may have lower interest rates and other costs, and FHA loans can be assumed–a borrower may transfer the loan to another qualified borrower rather than having the borrower apply for a new loan. But FHA home loans are also different because of the primary purpose of an FHA guaranteed single-family home loan–these loans are intended for residences. They are not for investment properties, time shares, etc. FHA loan rules state; “FHA

July 17, 2012

General FHA Refinancing Loan Rules

By Joe Wallace

There are many things borrowers ask when applying for an FHA refinancing loan for the first time. Some borrowers are interested in lowering their monthly payments, others are interested in cash-out refinancing loan options. But there are some basics every borrower should know about FHA refinancing loans, regardless of what kind of refinancing they wind up applying for. For example, FHA loan rules as written in HUD 4155.1 Chapter Three state that a borrower must be current on any loan being financed. “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” “Example:

July 16, 2012

FHA Loans and Military Service

By Joe Wallace

A reader asks, “Can you still use the FHA while being stationed overseas and still active duty?” This is a fairly complex issue and the answer is dependent on circumstances. If an active duty military borrower wishes to purchase a home with an FHA mortgage loan while still stationed overseas, there are several questions to be answered, including how the borrower intends to execute the FHA loan application. Eligible borrowers who are able to fill out the application themselves may be able to clear this initial hurdle, but those who rely on a power of attorney should know the FHA rules on loan applications in these situations: In general the FHA rules state, “The initial mortgage loan application may not be executed by using a power of attorney, except in | more...

July 6, 2012

FHA Announces Disaster Relief For Tropical Storm Debbie Victims

By Joe Wallace

A press release found on the FHA official site announces federal disaster assistance for victims of Tropical Storm Debbie in the state of Florida. According to HUDNo.12-110, President Obama has issued disaster declarations in several counties including Baker, Bradford, Clay, Columbia, Franklin, Hernando, Highlands, Pasco, Pinellas, Suwannee, and Wakulla. The President

June 27, 2012

FHA 203(H) Home Loans For Disaster Victims

By Joe Wallace

There is much in the news about wildfires, tropical storms and hurricanes. Tropical Storm Debbie has brought large volumes of rain and flooding risks to Florida residents, and Colorado home owners are currently threatened by spreading fires. In presidentially-declared disaster areas, the FHA offers a program to help victims recover. The FHA 203(h) home loan for disaster victims is described on the FHA official site as