Timely news, information and advice concentrating on FHA, VA and USDA residential mortgage lending.

Vimeo Channel YouTube Channel

Articles Tagged With: FHA Appraisals

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 30, 2012

FHA Loan Reader Question: FHA Condo Loan Approval

By Joe Wallace

FHA loan rules for home purchases are different than the rules for FHA insured loans for condominium units. Since there are unique requirements for condo loans–including a requirement that condos to be considered for FHA mortgages be on an FHA-approved list–the FHA has published a set of guidelines for condo mortgages. One reader wrote in to ask, “Is there a list of the FHA requirements that a condo project needs to comply with in order to be listed on the FHA approved list? Where can it be obtained? Thanks.” The list of FHA requirements for a condo to be approved and listed can be downloaded at: www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-19ml.doc What do these guidelines cover? According to the FHA, condo projects must consist of two units or more, and be covered by hazard | more...

 

January 27, 2012

FHA Loan Restrictions on Cash-Out Refinancing

By Joe Wallace

When borrowers want to refinance an FHA mortgage, there are two basic types of refinancing to choose from; FHA cash-out refinancing loans and those with no cash to the borrower. The FHA loan rules for cash-out refinancing are naturally more stringent than those with no money to the borrower–in cash-out transactions the borrower must qualify under FHA requirements and meet certain standards that may not be the same as for non-cash out transactions. What are the restrictions on FHA cash-out refinancing? For starters, according to the FHA official site at FHA.gov, “Cash out refinance transactions are only permitted on owner-occupied principal residences”. The FHA takes the owner/occupant issue quite seriously, going so far as to add an additional rule stating; “Non-occupant co-borrowers may not be added in a cash out | more...

 

January 25, 2012

FHA Loan Applications and Income Rules

By Joe Wallace

Borrowers who apply for an FHA insured mortgage are required to submit application data including specific details about employment, income, and the sources of that income. FHA income requirements aren’t limited to just dollar amounts and the history of the borrower’s employment–the sources and stability of the income listed on the application are also reviewed. A borrower’s debt-to-income ratio, the amount of money going out versus the amount of money coming in, is calculated using only verifiable and reliable income. The FHA has rules about the nature of the income that can be used for this calculation; if a borrower has a job that isn’t “stable and reliable” when it comes to income, it won’t help the borrower for the purposes of qualifying for an FHA mortgage. Specifically, the FHA | more...

 

January 25, 2012

FHA Loan Rules VS. Lender Requirements

By Joe Wallace

We encourage readers to submit their questions about the FHA loan process and related issues by using our comments section; as a result we’ve gotten a large number of comments about the difference between FHA regulations and lender requirements. For example, if the FHA requires a minimum FICO credit score, why does the lender require a higher score? Isn’t the borrower qualified at the lower, but still permissible score according to FHA loan rules? This is where a great deal of confusion can and does occur, mainly because of an expectation that the FHA rules have the final say in such matters. But the truth is that FHA lenders are free to require higher credit scores and other criteria so long as such requirements are applied equally for all applicants, | more...

 

January 20, 2012

FHA Loan Reader Question: Why Was I Denied an FHA Home Loan?

By Joe Wallace

Many readers write in with questions similar to the one we received this week, which includes the following: “I am recently divorced. While married, went through two bankruptcies (both discharged) have/had issues with back taxes (installment plans made and determined to be paid in full by ex per divorce decree). Have moved to another state, working (1.5 years), full time student. Was living with children, have moved into an apartment paying $600.00 per month (comfortably), because I could not get qualified for a loan. Have two major credit cards (visa/master credit cards not debts) established in my name for 1.9 years, never late, never over limit. Credit score is 620. Is there a main reason why, I did not or cannot be approved for a FHA loan?” Before addressing an | more...

 

January 17, 2012

FHA Loan Reader Question: Do I Qualify For an FHA Mortgage?

By Joe Wallace

FHA loans have minimum credit standards which include requirements for timely bill paying, dependable work history and other factors that can affect an FHA mortgage application. But FHA rules are designed to be flexible depending on a borrower’s circumstances. In general the FHA rules tend to be more forgiving when borrowers can show that financial difficulties were beyond the borrower’s control and have been resolved successfully. With that in mind, we turn to a recent question from one of our readers: “I am looking to buy, my current residence from a family member.

 

January 16, 2012

FHA Condo Loans

By Joe Wallace

Recently we’ve gotten a few reader questions about FHA condo loans. It’s true that the FHA will insure a condo loan for projects that are approved by HUD/FHA. Here are some facts about FHA condominium loans and the requirements for them. Condo Loans Are Different Than Suburban Home Loans By its very nature, FHA condo loans are unique compared to the ownership issues connected with a typical suburban home. According to the FHA official site, “Condominium ownership is different from other forms of home ownership.