Articles Tagged With: FHA Home Loan

November 6, 2017

Why Do People Prefer FHA Loans?

Why do people prefer FHA loans? It’s a question many ask, especially when comparing loan options to conventional, VA, or other non-FHA mortgages. What’s the appeal of the FHA mortgage loan? Why should first-time home buyers consider this option? FHA Loans Are Flexible FHA home loans aren’t just for one type of home, or for one type of buyer. There is no income limit for an FHA mortgage, the borrower has to be able to afford the mortgage based on the borrower’s debt-to-income ratio (how much money you have coming in compared to the amount going out each month for financial obligations). Credit ratings, employment, and other factors are also important, but the misconception that FHA mortgages are only for those who need financial help isn’t true. Any financially qualified | more...

Coronavirus And Home Loan Appraisals: What You Need To Know Now

October 30, 2017

FHA One-Time Close Construction Loans

By Bruce Reichstein

There is still time to consider an FHA construction loan in 2017. Those who are more interested in having a brand-new home built especially for them rather than purchasing an existing construction home with an FHA mortgage will be pleasantly surprised at the options available to them. FHA construction loans are different than other types of FHA mortgages and can be a bit more complex, but thanks to the FHA One-Time Close construction loan this process isn’t as complicated as other types of construction loans. Why? A Single Application and Closing Date For FHA One-Time Close Construction Loans The FHA One-Time Close construction loan is referred to in the FHA loan handbook, HUD 4000.1, as a “construction-to-permanent” mortgage. Some construction loans require the borrower to qualify twice; once to pay | more...

October 27, 2017

What Are The Lender Requirements For An FHA Loan?

By Bruce Reichstein

What are the lender requirements for an FHA loan? The answer to that question varies depending on the lender, but in general there are many areas the lender will examine to determine if you are able to afford an FHA home loan. FHA Lender Requirements For Employment And Income The FHA loan handbook, HUD 4000.1, requires your chosen participating FHA lender to verify your most recent two years of employment history. Those two years do not have to be with the same employer, but the lender will be looking for patterns of reliability where income and employment are concerned. The lender wants to know that your current income is stable, reliable, and likely to continue. FHA loan rules provide for the fact that not all income is employment-based. You cannot | more...

October 11, 2017

Is There An FHA Loan For Homes On Tribal Land?

By Bruce Reichstein

Is there an FHA loan for homes on tribal land? According to the FHA loan handbook, HUD 4000.1, a type of loan known as a “Section 248 Mortgage” is available specifically for home purchases of this type. HUD 4000.1 defines the Section 248 mortgage as “a purchase or refinance Mortgage covering one- to four-family dwellings on Indian Lands.” Since definitions are extremely important for many aspects of the FHA loan program, this section of the FHA loan rules also defines what the FHA considers to be “Indian land” and the communities that live there: “Indian Land refers to those lands that are held by or for the benefit of Indian Tribes under some restriction or with some attribute peculiar to the legal status of its owners. Indian Tribe refers to | more...

September 26, 2017

Can I Finance My FHA Loan Up Front Mortgage Insurance Premium?

By Bruce Reichstein

Can I finance my FHA loan Up Front Mortgage Insurance Premium (UFMIP)? And how does it affect my mortgage loan? These are questions many ask, unsure of whether FHA mortgage loan limits include the UFMIP and how they are allowed to pay. FHA Up Front Mortgage Insurance Premiums May Be Financed FHA loan rules in HUD 4000.1, the FHA loan handbook, state clearly that FHA UFMIP may be financed. It will be included in the final loan amount at closing time. UFMIP Must Be Financed Or Paid In Cash HUD 4000.1 instructs the lender to either collect the Up Front Mortgage Insurance Premium in cash at closing time, or have it included into the loan amount. However, the borrower must pay 100% either way-you cannot finance half the amount and | more...

September 20, 2017

How Do FHA Mortgage Loan-To-Value Limits Work?

By Bruce Reichstein

How do FHA mortgage loan-to-value limits work? The loan-to-value (LTV) limit is an indicator of how much of a down payment you’ll be required to make on the FHA mortgage loan. There’s no such thing as a no-money-down FHA mortgage for new purchases, so the LTV is an important detail in your loan transaction. The rules covering FHA LTV ratios are found in HUD 4000.1, the FHA loan handbook. There we learn the following by way of introduction to the FHA requirements in this area: “The determination of the maximum LTV percentage available is influenced by…the particular mortgage insurance program (See Programs and Products); and the transaction type. The Mortgagee must apply the lowest applicable LTV percentage as determined under the requirements in this section.” Your LTV limits are determined, | more...

September 19, 2017

FHA One-Time Close Construction Loans: How They Work

By Bruce Reichstein

How do FHA One-Time Close / Single-Close construction loans work? These FHA mortgages are for borrowers who want to have a home built for them from the ground up rather than looking for an existing home to purchase and move into right away. Many participating FHA lenders offer these loans for “stick built” homes, which are homes built on-site (as opposed to a manufactured home which is delivered pre-built in sections and assembled). What are the rules for this type of FHA construction loan? From the FHA/HUD official site, we learn that a One-Time Close loan is also known as a “construction to permanent” loan. “A construction to permanent mortgage combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional | more...

September 18, 2017

Can I Add Energy-Efficient Upgrades To An FHA One-Time Close Construction Loan?

By Joe Wallace

Can I add energy-efficient upgrades to an FHA One-Time Close Construction Loan? FHA loan rules governing the FHA Energy Efficient Mortgage add-on to other loans such as an FHA One-Time Close new construction loan are found in HUD 4000.1. There we learn the following on page 400: “The Energy Efficient Mortgage (EEM) program allows the Mortgagee to offer financing for cost-effective energy efficient improvements to an existing Property at the time of purchase or refinancing, or for upgrades above the established residential building code for New Construction.” We know from that reading of FHA loan rules that new construction loans (including One-Time Close mortgages) do qualify for FHA EEMs, which allow the borrower additional funds for an “energy package” defined as: “…the set of improvements agreed to by the Borrower | more...

September 18, 2017

What Is A New One-Time Close Construction FHA Home Loan Compared To Existing Construction Loans?

By Bruce Reichstein

What is an FHA new construction loan compared to existing construction loans? Essentially the difference involves whether the home has been occupied or not since the time it was completed. FHA loan rules governing how such properties are classified can be found in HUD 4000.1, the FHA Loan Handbook. Existing Construction Existing construction loans are for structures that have been occupied at least once since the time they were completed. Such properties may be very new, others may be very old. “Existing Construction” loan procedures are less complex than for New Construction loans because the permits, escrows, inspections and other aspects of building a home have already been satisfied before the borrower comes along to buy the property. New Construction This type of property has never been occupied by an | more...

September 15, 2017

Am I Ready To Apply For An FHA Mortgage?

By Joe Wallace

Am I ready to apply for an FHA mortgage? There’s a set of questions you should ask yourself that can help gauge your readiness to apply for a home loan. Some of them are obvious questions, some aren’t so obvious. All of them deserve some thinking time before you begin filling out application data. Have I Requested Copies Of My Credit Report? If you don’t know what is on your credit report, or if it’s been more than six months since you last reviewed your credit, it is best to wait to fill out a home loan application until you know what your lender will see. Identity theft is a major issue, and now more than ever a borrower should be fully informed as to the contents of those credit | more...