Articles Tagged With: FHA Appraisals

March 1, 2012

Why Was I Rejected For An FHA Home Loan?

We get many reader comments and questions about FHA insured home loans. Many of them involve the loan process, appraisal procedures and refinancing issues, but some people ask us why they were turned down for an FHA loan, or want to know about the rules concerning loan approval and denial. When an FHA home loan applicant is denied a loan, there are several things which must happen. Many borrowers rightly want to know the specific reasons they were turned down for a home loan and whether it’s possible to try again after addressing the concerns which led to having the FHA loan application denied. Did you know the lender is required to inform the borrower not only as to the reasons why the loan was turned down, but in some | more...

February 27, 2012

FHA Loan Reader Questions: Seller “Assistance” Limits

By Joe Wallace

We always encourage people to ask us questions about the FHA home loan process in our comments section, and one thing that definitely helps us to answer them properly is to provide as much specific detail about your question as possible. One reader asks, “Applying for an FHA Loan and was told that the assistance with closing costs on my loan floats. One day it could be 5.0% or 4.0%. Is that true?” It’s tough to know what the specific question is in this case, but most likely the reader is asking about seller concessions. These concessions are permitted by FHA loan rules, which state; “The seller and/or third party may contribute up to six percent of the lesser of the property

February 20, 2012

FHA Loan Reader Question: Self-Employed Borrowers

By Joe Wallace

A reader asks, “Is it possible to get an FHA loan if the ‘gap’ in employment was due to starting your own business? I have 1099?s that show income, as well as pay stubs as a contractor with a contract in place. The company paying me wants to hire me full time as a w-2 employee.” FHA home loans require the borrower to verify employment, but the lender does not have to deny a loan simply based on alternative, non-traditional, or self-employment. However, the rules for these types of employment are a bit more stringent so that the loan officer may properly verify income. When you fill out an FHA loan application, you’re required to list your employment prior to the period of self-employment, plus list out specific details of | more...

February 17, 2012

FHA Loan Reader Question: Bankruptcy and Job Loss

By Joe Wallace

A reader recently sent us a lengthy comment as part of a request for assistance on FHA loan topics. He writes, “I had a foreclosure in a bk chap 7 that was discharged in Nov 2009. This was due to a job lost in 2008 like most of the country. I had to get unemployment for I went over one year looking for another job. I went back to work full time in Dec 2009…” We won’t reproduce the entire correspondence here, but we thought it important to address the issues mentioned above as there are plenty of other readers who may be facing similar circumstances. Is it possible to get a new FHA home loan with conditions like the ones previously mentioned as part of the borrower’s history? Let’s | more...

February 14, 2012

FHA Loan Debt To Income Ratios: Do Student Loans Count?

By Joe Wallace

FHA loans require the lender to calculate the borrower’s debt-to-income ratio to determine if the applicant can realistically afford to make a monthly FHA mortgage payment. The borrower’s debts are reviewed and compared to the amount of money coming in–if the ratio is within FHA requirements, the loan can be approved (assuming the borrower meets the other FHA loan criteria). Some borrowers are rightfully concerned about the amount of debt they bring to the bargaining table. Too much debt and the borrower could be denied the FHA home loan. But not all financial obligations are necessarily counted toward the borrower’s debt-to-income calculation. FHA loan rules say some debts, usually with 10 months or less remaining on the payment agreement, do not have to be counted. The lender may choose to | more...

February 14, 2012

FHA Loan Questions: Debt-To-Income Ratios

By Joe Wallace

When you apply for an FHA home loan, you’re required to list all current debts and other financial obligations. This helps the lender calculate the debt-to-income ratio, which must fall within the FHA required percentage. Borrowers should know what the FHA and HUD.gov say about the debt-to-income ratio percentages; “…monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, 4 should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.” Borrowers should be concerned with the amount of debt they currently have before applying for an FHA home loan. Paying off credit cards and closing unneeded open lines of credit should | more...

February 9, 2012

FHA Loans and Inducements To Purchase

By Joe Wallace

Recently we got a reader question about seller concessions and FHA home loans. Under the rules for an FHA mortgage, the seller is allowed to contribute certain concessions (interest rate buydowns and other contributions) as long as the concessions don’t exceed the FHA’s maximum rate. According to FHA loan rules at the time of this writing, “The seller and/or third party may contribute up to six percent of the lesser of the property

February 9, 2012

FHA Down Payments and Seller Concessions

By Joe Wallace

A reader asks, “It is my understanding the buyer must pay at least 3.5% as a down payment and the buyer could not contribute more than 3.5% of the purchase price.

February 8, 2012

FHA Loans: Is a Down Payment Always Required?

By Joe Wallace

We get many questions about FHA home loans from our readers; some of the most frequently asked include questions about FHA loan down payment issues and the acceptable sources of down payment funds. It’s true that all FHA new purchase home loans require at least a 3.5% down payment. That amount–the 3.5%–is current at the time of this writing. If that FHA mortgage down payment requirement changes, your lender should let you know before you commit to the mortgage in writing. In Chapter 5 of HUD4155.1, the rules state clearly; “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price.” The reason the FHA requires the | more...

February 3, 2012

Reader Question: Can I Get an FHA Debt Consolidation Loan?

By Joe Wallace

A reader asks, “Is it possible to get an FHA loan and consolidate my house and credit card?” According to FHA loan rules, new purchase FHA loan amounts are limited to the statutory loan limit for the area, or “a percentage of the lesser of the appraised value, or sales price.” This would preclude getting cash back on the deal unless the borrower was owed a refund of some kind–FHA loans also require at least a 3.5% minimum down payment. The borrower must provide funds to close the deal. But FHA refinancing loans do feature a cash-out refinancing loan option. FHA rules do technically permit FHA cash-out refinancing for debt consolidation, but advises lenders, “Cash out refinancing for debt consolidation represents considerable risk, especially if the borrowers have not had | more...