Articles Tagged With: FHA 203k Mortgage

February 7, 2012

Can Repair Costs Be Added to the FHA Loan Amount?

The FHA has strict rules about how a loan may be calculated. There’s the minimum cash investment required of the borrower, there are FHA loan limits, and there are rules covering what kinds of incentives a seller may provide in the form of interest rate buydowns and other financial contributions. Did you know that in some cases, the cost of home repairs on a sale property can be included in the sale price of the home for FHA loan purposes? According to Chapter Two of HUD4155.1, “Repairs and improvements may be added to the sales price before calculating the mortgage amount when…the repairs and improvements are required by the appraiser as essential for property eligibility”. These costs must be paid by the borrower, and

February 2, 2012

FHA Loan Rules: Minimum Cash Investment

By Joe Wallace

Some FHA loan terms and jargon can be confusing for the first-time borrower. For example, some readers want to know what the FHA means by “minimum cash investment”. This phrase is basically another way of stating the term, “down payment” and refers to how much money down the borrower will pay. According to FHA loan rules as stated in HUD 4155.1 Chapter Two; “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by the lesser of the property

January 31, 2012

FHA Loans, Effective Income, and Alimony

By Joe Wallace

One important section of the rules for FHA loans states a borrower’s income must be verified by the lender as “effective income”. This means that the income must be stable and likely to continue. Some types of income can’t be counted. A part-time business selling goods on eBay, for example, might not qualify. But what about other types of non-employment income like child support, alimony, or maintenance payments? There are plenty of borrowers who receive or are eligible to start receiving these types of payments. Does the FHA recognize them as effective income? In certain cases, yes. Alimony, maintenance payments as part of a divorce decree, and/or child support can qualify and be counted toward a borrower’s debt-to-income ratio provided the payments meet standards set by they FHA. According to | more...

January 10, 2012

FHA Home Loan Interest Rates

By Joe Wallace

The FHA loan rulebook provides lenders with a set of guidelines and requirements for FHA loans. One important section of those rules, as found in HUDdoc 4155.1, has to do with interest rates and something called interest rate lock-in periods. The government does not set the interest rates for FHA loans. According to the FHA loan rules, “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” But the fact that those rates and points are negotiable does not mean interest rates are not regulated by FHA loan rules–once those rates are agreed upon, the lender must abide by the rules for the FHA loan program. For example, the amount of time the lender is bound to | more...

December 16, 2011

FHA Appraisals–Do They Guarantee The Condition of the Home?

By Joe Wallace

One of the most commonly asked questions about FHA loans concerns appraisals and inspections. What’s the difference between the two? An appraisal is a mandatory part of the FHA loan process. Without an appraisal, there can be no FHA home loan because there’s no way to establish the fair market value of the property in the eyes of the FHA. In some rare cases an appraisal may not be required because a previous FHA appraisal has not expired yet, but borrowers should expect and budget for an appraisal in most cases. The FHA appraisal is not a comprehensive, top-to-bottom review of a home to discover any/all defects or issues with the home. The FHA appraisal does not guarantee the home is free from defects or other problems. An FHA appraiser | more...

December 13, 2011

FHA and HUD Information In Spanish

By Joe Wallace

The FHA and HUD offer a wide range of information, advice, and news about FHA insured home loan programs. Part of that information includes FHA/HUD resources in Spanish. Did you know there’s an entire Spanish-language site dedicated to the same information provided in English? The Spanish language version of these pages is available at http://espanol.hud.gov/home.html and features information about buying vs. renting, home economics, FHA loan advice and other valuable resources. For those who have already purchased homes with an FHA mortgage, there are resources including topics on FHA/HUD refunds and “refund tracers,” refinancing options, foreclosure avoidance and other important details. When it comes to foreclosure avoidance advice, borrowers in trouble on their FHA loans in need of Spanish-language resources should see the page titled, “Gu

December 7, 2011

What is an FHA 203(n) Mortgage Loan?

By Joe Wallace

As we’ve written in other blog posts, the most well-known FHA home loan is called the FHA 203(b). This is the mortgage loan product most FHA borrowers who are first time house hunters will apply for to purchase a home. But there are many other types of FHA home loans, including something known as the FHA 203(n). This is also known as a Single Family Cooperative Mortgage and according to the FHA, is designed to insure loans “for persons buying a unit in a cooperative housing project. The loan is made by a lending institution, such as a mortgage company, bank, or savings and loan association, and is insured by HUD’s Federal Housing Administration (FHA).” As with other FHA loans, the purpose of the FHA 203(n) Single Family Cooperative Mortgage | 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 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...

November 25, 2011

HUD Rules Proposed To Refine Fair Housing Laws

By Joe Wallace

Those applying for FHA home loans for the first time soon learn about the wide range of federal laws enacted to insure fair treatment in the lending and housing markets. But according to Department of Housing and Urban Development Secretary Shaun Donovan, those laws need to be modified to be more inclusive. In Donovan’s official HUD blog, he writes, “…I