Articles Tagged With: FHA Energy Efficient Mortgage

November 29, 2013

FHA Credit and Downpayment Requirements: A Reader Question

A reader asks, “I have checked my credit report before and it came back insufficient. I do have older doctor bills that are outstanding but everything else I have saved and payed cash for, therefore making it unnecessary to have a credit card.” “If I had a portion of money for a down payment on a house would I be able to receive an FHA loan? And I would also like to know what the first step of buying a house is, because I would be a first time home buyer and have no idea what the process is.” Having the required minimum 3.5% cash investment is only one requirement for FHA loan approval, so the simple availability of the down payment wouldn’t be enough. A borrower is required to | more...

November 19, 2013

Credit Qualifying Information For FHA Loans: What Your Lender Needs

By Joe Wallace

It’s good to understand the process of FHA loan approval. Knowing what your lender is looking for on your credit application is an important part of being ready for an FHA mortgage application. When you fill out your credit forms, what does your lender do with all that data? When it comes to your credit information, the lender doesn’t just rely on what’s provided on your paperwork; FHA loan rules listed in HUD 4155.1 say the lender must request a credit report that consists of information from the three major credit reporting agencies in something called a Three Repository Merged Credit Report or TMCR. That data must include: –all inquiries made within the last 90 days –all credit and legal information not considered obsolete under the Fair Credit Reporting Act (FCRA), | more...

November 15, 2013

FHA Loans and Residency Status

By Joe Wallace

One not-so-common, but very important question for some potential FHA borrowers revolves around citizenship status. Does a borrower have to be a citizen of the United States in order to apply for an FHA home loan? Let’s examine what the FHA loan rules published in HUD 4155.1 Chapter Four Section A say about this question. According to Chapter Four, “U.S. citizenship is not required for mortgage eligibility. The lender must determine the residency status of the borrower, based on information provided on the loan application, and other applicable documentation. “ That is good news for people in a variety of circumstances including legal resident aliens, those who are taking citizenship tests or who are in the process of relocating to this country under certain conditions. Chapter Four adds, “FHA insures | more...

November 14, 2013

Looking For An FHA Loan In Another Part Of The Country? A New HUD Tool Could Help

By Joe Wallace

Not everyone looking for a home with an FHA loan has the luxury of being able to drive through a lot of neighborhoods to look at all the “for sale” signs. Some are forced to look for a new home out of necessity–a job relocates to a new city, a new promotion requires a change of address, sometimes even natural disasters can urge a house hunter to look elsewhere. A lot of people feel at a disadvantage when it comes to looking for homes in a city other than their own, which is why the Department of Housing and Urban Development has created a new tool to help FHA loan applicants and anyone else looking for a home loan. According to a recent FHA/HUD press release, U.S. Housing and Urban | more...

November 12, 2013

Current FHA Loan Rules For Applying For A New Loan After a Short Sale

By Joe Wallace

Mortgage loan rules can change over time for a variety of reasons. Borrowers who researched their loan options a year or more ago may be surprised to learn that the rules that applied at the time they explored their options may have changed due to regulatory requirements, financial institution policies, or FHA program rule updates. With that in mind, here is the current FHA guidance regarding a borrower’s options for applying for a new FHA mortgage loan following a short sale. FHA loan rules published in HUD 4155.1 state that while having a short sale on your financial record is not grounds in itself for disqualifying a borrower, certain requirements and restrictions may apply. “A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale | more...

November 5, 2013

FHA Loan Foreclosures: How Long Must a Borrower Wait To Apply Again?

By Joe Wallace

We’ve received a lot of reader questions in recent days about FHA loan eligibility issues, including queries on how long the borrower must wait after foreclosure on a previous FHA home loan before applying for a new FHA mortgage. FHA loan rules address this issue in HUD 4155.1 Chapter Four, Section A. In the section titled, “Eligibility for FHA-Insured Financing”, we find the following guidance to the lender under the subheading, “Waiting Period for Borrowers With Past Delinquencies, Defaults or Claims on FHA Loans”. It says: “If the borrower has had past delinquencies or has defaulted on an FHA- insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage.” This waiting period is mandatory, though borrowers should ask their loan officer or contact | more...

November 4, 2013

FHA Loan Income Requirements: A Reader Question

By Joe Wallace

A reader asks, “I have a question about the FHA 3.5 percent down program. I know my scores are all in the high six’s lowest 637 highest 677 , I was told that I qualify for the loan but when push came to shove, I was told I needed my net income to be almost 4 times what i make now. What is or are the financial requirements to qualify for the program? Also, I am self employed and have been for over 5 years. I presume the rules vary from lender to lender, state to state, etc…I need to know if this lender purposely made up this story just to ‘show me the door’ so to speak.” We can’t speak for a lender’s intentions, so we’ll skip the last | more...

November 1, 2013

FHA Refinancing Loan Basics

By Joe Wallace

There are several different types of FHA refinance loans. One is known as an FHA Streamline Refinance, which is for borrowers with existing FHA mortgages. Another is the FHA’s cash-out refinancing option, and there’s also a no cash-out refinance loan where proceeds of the loan are used to pay closing costs and other expenses related to the new loan. Streamline loans can be offered with or without an appraisal, while cash-out and no cash-out loans both require one. The term of these refinancing loans depends on the type of loan. The FHA loan rules for refinancing loans are found in HUD 4155.1, which says, “The maximum term of any refinance with an appraisal is 30 years. The maximum term of a streamline refinance without an appraisal is limited to the | more...

October 31, 2013

FHA Loan Mortgage Insurance: A Reader Question

By Joe Wallace

A reader asks, “Veterans are not required to purchase mortgage insurance with a VA loan. Is there a way that a veteran can be exempt from the mortgage insurance premium? The mortgage insurance is very high.” The short answer to this reader question is “no”. FHA loans are not designed the same way that VA home loans are–FHA loans require a Mortgage Insurance Premium (MIP), where VA home loans do not. Veterans should consider their options between VA home loans and FHA mortgages carefully. In some cases a veteran or currently serving military member could choose an FHA loan over a VA mortgage, for a variety of reasons. But a borrower faced with these choices should make the most informed decision possible. FHA home loans do have certain similar features | more...

October 30, 2013

FHA Loans, Verifiable Income, and VA Benefits

By Joe Wallace

Some veterans and currently serving military members may choose to pursue an FHA home loan instead of a VA mortgage for any number of reasons. If a borrower is eligible for VA benefits, can he or she count those benefits as income for the purposes of qualifying for an FHA insured mortgage loan? According to the FHA loan rulebook, military pay and some benefits may be counted as verifiable income as long as it meets the right criteria. Chapter Four of HUD 4155.1 says, “Military personnel receive base pay, and are often entitled to additional forms of pay, such as • variable housing allowances • clothing allowances • flight or hazard pay • rations, and • proficiency pay. These types of additional pay are acceptable when analyzing a borrower’s income | more...