Articles Tagged With: Down Payment

January 5, 2015

FHA Loan Reader Questions: Zero Down Payment Home Loans

A reader asks, “I am wanting to know the best way for me to purchase a house with no down payment. Many years ago had a home through an FHA loan, due to divorce we resolved the case. I found a home I would like to have in the country posey road, 5 acres, nice home all new flooring, simple but a very nice home.” “Can you tell me how to go about getting a loan with no down payment and how I can see if you can consider the home I want meets your requirements etc. I’m on Medicare/disabled with an income.” HUD 4155.1 Chapter Five Section B directly addresses this reader question, assuming the question is about FHA loans in general. We can’t speak to non-FHA mortgage loans, | more...

September 10, 2014

FHA Loan Reader Questions: Bank Statements

By Joe Wallace

A reader asks, “Is a bank statement, showing the amount needed at closing, required with my application? What is a lender required to ask me for?” In some cases the FHA gives the lender the option of collecting a bank statement, and in others the bank statement is FHA-required. Lender standards may insist on bank statements, so what the FHA allows and what the lender requires may differ; the FHA may not require a bank statement in some cases, but the lender is free to. We can find evidence of this in HUD 4155.1 Chapter Five Section B under the heading, “Cash and Savings/Checking Accounts as Acceptable Sources of Funds” states: The lender must verify and document the deposit amount and source of funds, if the amount of the earnest | more...

February 12, 2014

FHA Loan Reader Questions: Down Payments and Bankruptcy

By Joe Wallace

We’ve gotten plenty of reader questions lately on the subjects of down payments, bankruptcy, and eligibility for FHA home loans. Here’s one: “Is there any company that will finance a small condo without a down payment. Thank you” And here’s another: “My wife and I surrendered our home thru a chapter 13. The chapter 13 was a 100% repayment plan that was successfully discharged in December of 2013…We have entered into a lease option home purchase and would like a straight answer on how long of a “waiting period” we must endure before we are able to finance a home again? We also have about $80K in sweat equity against an agreed upon purchase price of $270K. What type of down payment can we expect to need?” FHA loan rules | more...

January 27, 2014

FHA Loan Answers: Can A Parent Buy A Home With A Child Using An FHA Loan?

By Joe Wallace

Lots of parents want to help their children get a leg up in the early stages of adult life. Some parents pay for their children to go to college, some buy cars, and still others buy homes for their children. Can a parent and child apply for an FHA mortgage together even if the parent doesn’t plan on living in the home? FHA loan rules found in HUD 4155.1 explain what is possible and what is not possible for an FHA loan when it comes to applications with “non-occupying co-borrowers”. In such cases, Chapter Two Section B of HUD 4155.1 says, “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. When there are two | more...

January 16, 2014

Can A Family Member Loan Money For Closing Costs On An FHA Mortgage?

By Joe Wallace

When you apply for an FHA loan, the lender will explain that there are a variety of closing costs to anticipate including the amount of the required 3.5% FHA loan down payment. Some FHA loan applicants may struggle financially with the credit costs and seek to borrow money to cover them. FHA loan rules permit this but only under approved conditions. A borrower’s required funds for down payment, for example, must come from an approved source such as personal savings, investments, or (in cases where a loan is required) from a secured loan. Down payment money cannot come from credit card cash advances, payday loans or other “non-collateralized” loans. Can a family member lend an FHA borrower the funds to close? According to FHA loan rules in HUD 4155.1, Chapter | more...

January 15, 2014

FHA Loan Assumptions: For Qualified Borrowers

By Joe Wallace

Yesterday we discussed FHA loan assumption policies—FHA loans are assumable, provided the lender can determine that the proposed new owner is able to financially qualify for the mortgage. According to HUD 4155.1 Chapter Seven, the following applies to all FHA home loans subject to laws affecting loans closed in 1989 and after: “Under the HUD Reform Act of 1989, mortgages closed on or after December 15, 1989 require credit qualification of those borrowers wishing to assume the mortgage. The creditworthiness review requirement spans the life of the mortgage. This requirement applies to both those borrowers who • take title to a property subject to the mortgage without assuming personal liability for the debt, and • assume and agree to pay the mortgage.” FHA loan rules state that any mortgage falling | more...

January 10, 2014

FHA Loans And Outstanding Debt: A Reader Question

By Joe Wallace

A reader asks, “If you have those (FHA) minimum scores do you still have to pay some remaining debt on your credit report? What if most those are doctor bills, and do they have a special buyers program for people on disability?” Though this reader question isn’t entirely clear, it seems the main issue is whether having outstanding debt might be an issue when applying for an FHA home loan. The real question for the lender in cases like this is whether the debt is typical monthly payments or a delinquency which needs to be resolved. According to FHA loan rules, outstanding debt can be an important factor in FHA loan approval or denial: “Past credit performance is the most useful guide to • determining a borrower’s attitude toward credit | more...

December 23, 2013

FHA Loan Rules For Section 8 Income & Government Assistance: Reader Questions

By Joe Wallace

We’ve gotten several questions lately from readers about FHA loans, government assistance and Section 8 income. What does the FHA loan rulebook say about government assistance and Section 8 income used to qualify for an FHA guaranteed home loan? When it comes to government assistance, FHA loan rules found in HUD 4155.1, Chapter Four say, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.” The continuation of the income is key, so borrowers using government assistance income to qualify should be prepared to submit documentation of the income according to the lender’s requirements. Borrowers should know that FHA loan rules also address government assistance that isn’t expected to | more...

December 20, 2013

FHA Loans and Commission Income: A Reader Question

By Joe Wallace

A reader asks, “Is it true that if you work in a job where your pay is based on commission you have to be with your current employer for at least one year to obtain a FHA loan, even if your prior job was in the same line of work and was also a commission paying job?” FHA loan rules require the lender to verify employment and income. Only verifiable income can be used to calculate a borrower’s ability to afford an FHA home loan and there are FHA regulations that determine what constitutes verifiable income. Commission income can be used if it meets certain criteria. The rules governing commission income are found in HUD 4155.1, Chapter Four Section D under a heading titled, “Salary, Wage, and Other Forms of | more...

December 10, 2013

Closing the FHA Loan: Settlement Costs

By Joe Wallace

When you learn about FHA home loans, the phrase “cash required to close” is one you’ll soon become familiar with. One of the reasons so many experts recommend taking as much time as possible to prepare for a home loan? Giving yourself enough time to save up the money required to close the deal. The required 3.5% down payment is part of that, as are the payments you’ll need to make for appraisals and any required compliance inspection. But there are other costs as well; fortunately FHA loan rules in HUD 4155.1 instruct the lender to prepare an estimate sheet to give the borrower a better idea of what these expenses are. According to Chapter Five of HUD 4155.1, “For each transaction, the lender must provide the initial Good Faith | more...