Articles Tagged With: Credit Requirements

December 14, 2011

FHA Energy Efficient Mortgage Loans Part Two

In a recent blog post we discussed the FHA Energy Efficient Mortgage Loan (EEM) and some of the basics of the program. The FHA EEM is for new purchase and refinancing mortgages and lets the borrower finance additional costs of energy-efficient upgrades or improvements to the home. Because the FHA loan program has loan limits and specific rules that govern those limits, it is easy to see how borrowers new to the FHA loan program could be confused by the terms of such a loan. After all, if a borrower can add at least $4,000 (or as much as $8,000 depending on the circumstances) to the FHA loan, how does one roll the costs of the improvements into the mortgage without exceeding the FHA loan limit for that purchase? According | more...

December 13, 2011

FHA Loans, Military Applicants, and Occupancy Rules

By Joe Wallace

There are many reasons why a military member could choose to apply for an FHA insured home loan instead of applying for a VA mortgage. Those reasons may include occupancy issues, personal choice when considering FHA loan fee structures versus VA insured mortgage fees, etc. The decision to purchase a home with an FHA mortgage instead of a VA loan could be influenced in part by language in the HUD document 4155.1, Mortgage Credit Analysis for Mortgage Insurance, which addresses occupancy issues. According to the VA official site Frequently Asked Questions list, occupancy rules for a VA Home Loan include a requirement that the veteran or spouse occupy the property bought with a VA insured loan as the primary residence: “Q: I am a single veteran stationed overseas and want | more...

December 12, 2011

FHA Loan Forbearance Rules For Unemployed Borrowers

By Joe Wallace

In July 2011, the Obama administration announced changes to the FHA loan program which requires lenders to extend FHA loan forbearance to unemployed borrowers. This change affects those who already have FHA mortgages rather than those applying for them; the new rules “require servicers to extend the forbearance period for unemployed homeowners to 12 months. The Administration also intends to require servicers participating in the Making Home Affordable Program (MHA) to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines.” According to the FHA press release announcing these changes, “These adjustments will provide much needed assistance for unemployed homeowners trying to stay in their homes while seeking re-employment. These changes are intended to set a standard for the mortgage industry to provide more robust | more...

December 9, 2011

FHA Home Loan Resources By State

By Joe Wallace

Did you know that the FHA and HUD offer by-state listings of FHA-related news, programs, home loan resources and other information? While FHA home loans are available nationwide, there are many state and local programs designed to help home owners, FHA borrowers, veterans and others affected by such programs. For example, on the Alabama page at http://portal.hud.gov/hudportal/HUD?src=/states/alabama there is a press release detailing a Department of Housing and Urban Development grant to the State of Alabama to the tune of $120 thousand to fight housing discrimination and uphold fair housing initiatives. On the North Dakota page there are stories of the latest initiatives on the state and local level to assist low-income families. These state page on the FHA official site also contain valuable links to information for foreclosure avoidance, | more...

December 7, 2011

Can an Energy Efficient Mortgage Loan Be Used With an FHA 203(k) Loan?

By Joe Wallace

The most common FHA insured home loan is called the FHA 203(b). This is the loan most people considering a first time home purchase will apply for when they look into the FHA loan program. Another type of FHA loan is the 203(k), which according to the FHA official site, “enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage

December 6, 2011

FHA Loans and the Debt To Income Ratio: Projected Debt

By Joe Wallace

In a previous blog post, we mentioned the importance of the debt to income ratio as part of the FHA loan application process. Calculating the debt to income ratio for the purpose of underwriting an FHA mortgage loan includes adding up the entire monthly mortgage obligation (principal and interest, escrow for taxes, hazard insurance, mortgage insurance premium, and any homeowners’ association dues) and reviewing all revolving and installment debt due per month. These can include personal and automobile loans, student loans, credit card debt and more. These amounts are combined and divided by the borrower’s verified gross monthly income. FHA rules say the maximum ratio to qualify is 41%. But when calculating that debt to income percentage, the FHA requires lenders to examine not only current financial obligations but also | more...

December 5, 2011

FHA Loans and the Debt To Income Ratio

By Joe Wallace

The debt to income calculation is a very important part of a borrower’s FHA loan application review. The lender must analyze the amount of verified income and compare it to the amount of debt the borrower has to see whether the borrower can afford his or her current monthly obligations and the projected monthly FHA mortgage loan payment. To do this, the lender takes income (only income which can be verified as stable and reliable) and compares it to all current debt and calculates what percentage the debt takes of the verified income. How is this done? The lender adds up the total mortgage payment, which includes principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, and any other payments that are considered part of | more...

November 30, 2011

FHA Loan Loan Limits and Non-Occupying Co-Borrowers

By Joe Wallace

If you’re buying a single-family home with an FHA insured mortgage, FHA loan rules require you to certify the property will be your primary residence. But FHA loans do permit a loan with co-borrowers who do not plan to occupy the property. Chapter Three of FHA Handbook 4155.1 states, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence.” This in mind, borrowers should know that there is a different FHA maximum mortgage permitted for a non-occupying borrower transaction in many circumstances. “When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV).” However, the rules do | more...

November 29, 2011

FHA Help Available For Those At Risk of Foreclosure

By Joe Wallace

The FHA encourages borrowers worried about going into default or foreclosure on their FHA mortgages to seek help as soon as possible. The earlier a borrower acts, the better chance he or she has of saving the home and preventing damage to credit and other issues. One of the most important thing a borrower can do is to get Foreclosure Avoidance Counseling as early as possible The FHA and the Department of Housing and Urban Development offer help in this area; the FHA official site says, “HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama’s comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or | more...

November 29, 2011

FHA/HUD Disaster Relief for New Mexico Storm Victims

By Joe Wallace

Believe it or not, 2011 storm relief is still needed this late in the year–though the relief announced by the Department of Housing and Urban Development is for weather-related problems in New Mexico that happened during the month of August, not for natural disaster issues in the current month. According to the press release HUD No. 11-276, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of New Mexico and provide support to homeowners and low-income renters forced from their homes following flooding in August.” Some readers will likely wonder why the assistance is only now being announced. According the press release, areas of New Mexico have recently been named as Federal Disaster Areas, allowing the FHA and HUD to | more...