Articles Tagged With: FHA Home Loan

February 28, 2017

FHA Well Water Requirements: A Reader Question

What do FHA appraisal requirements have to say about the testing of well water? A reader got in touch with us recently to ask us about well water testing: “Is there an automatic testing of the well required just because it is surrounded by extensive farm land? I know that is required for USDA but wasnt aware that FHA required it. A reviewer is telling me it is in the 4000.1 Handbook and I dont remember seeing that.” The answer to this particular question is addressed in HUD 4000.1 on page 495, but before we get to the specifics, it’s important to point out that FHA loan standards are often not the only ones that must be met in situations like these. The local health authority may require testing of | more...

February 24, 2017

Child Support Income and FHA Loans

By Joe Wallace

A reader got in touch with us to ask a question about how a participating FHA lender will view child support payments. “My significant other and I want to apply for a house loan together. He technically still pays me child support, but it will end once we own a house together. Can we still count that as part of my income for a home loan? And/or does that effect his income for the loan at all?” There are a variety of factors that could influence the answer to this question. One is state law. Does the borrower live in a community property state? Is the couple legally married and thus subject to such laws where applicable? Does other state law govern how child support and/or alimony can be handled | more...

February 13, 2017

FHA Appraisal Basics You Should Know

By Joe Wallace

The FHA appraisal process can be mysterious to some. It’s not as complete as a home inspection, the results of the appraisal should not be mistaken for a home inspection, nor should the FHA appraisal be considered as a stamp of approval on a home. So what IS an appraisal? And what do FHA appraisal rules require from this process? There’s an old notion borrowers should know about when it comes to inspections versus appraisals. The appraisal is basically a tool for the lender, the inspection is for the borrower. As long as you keep that in mind when ordering your home inspection, you’ll be able to keep these two separate processes in the right perspective. HUD 4000.1 has rules and instructions for how an FHA appraisal is to be | more...

February 6, 2017

Mortgage Rate Trends: Higher, Lower

By Joe Wallace

Last week, mortgage rate numbers basically see-sawed within the range we’ve been looking at ever since the new year began. Mortgage rates began last week lower, but moved up and down from Wednesday on due to a variety of economic data releases and investor reaction to them. The Fed also made a statement last week that negatively affected rates. The causes of the ups and downs are not directly tied to rate performance, but investor reaction to the economic developments and data of last week does affect rates. Overall, we’re seeing about the same rates at the time of this writing as we reported last week, more or less, but changes in closing costs will be apparent to borrowers affected by those changes. At the time of this writing, 30-year | more...

February 2, 2017

FHA Mortgage Facts You Should Know

By Joe Wallace

FHA mortgage loans are a very good option for borrowers looking for a lower down payment and less stringent credit requirements than conventional mortgages. Did you know that FHA home loans do not feature a minimum or maximum income requirement? A borrower’s ability to qualify for an FHA mortgage depends on FICO scores, debt-to-income ratios, credit history, and other factors but there’s no “qualifying dollar amount” for income in terms of minimums OR maximums. Some believe that FHA mortgages are only for first time home buyers, the economically disadvantaged, or only for typical suburban homes. But FHA home loans are available to anyone who is financially qualified and wants to use the property to be purchased as their primary residence. FHA mortgages require only a 3.5% down payment in typical | more...

What You Need To Know About Your FHA Home Loan

February 1, 2017

FHA Loan Rules: Who Can Sell You The Home?

By Joe Wallace

FHA requirements and FHA loan rules are designed to protect the lender in some cases, the borrower in others, and sometimes both at the same time. The FHA appraisal process, for example, is designed to insure that the home will be viable for the entire lifetime of the mortgage. That protects the bank’s investment and the borrower’s ability to refinance or sell the property later. One set of FHA loan rules that seems to a have a definite consumer-friendly intent has to do with who is eligible to sell you the home you want to buy with an FHA loan. HUD 4000.1, the FHA single family home loan rule book, has a section that outlines basic requirements for FHA mortgages. Those requirements include controls on who may sell you the | more...

January 25, 2017

Cash Back To The Borrower and FHA Loans

By Joe Wallace

Do FHA loans permit cash back to the borrower? We get many reader questions in our comments section about this subject. Some want to know if they can borrow more than the cost of the home and use the excess funds for personal use. Others want to know if cash-back refinance options are available on FHA mortgages. The rules that govern cash back to the borrower can be found in HUD 4000.1. As a general rule, FHA loans for “forward mortgages”, which means typical house purchases, do not allow cash back to the borrower. There’s an exception for money that was paid up front for something that was later permitted to be included into the loan amount. That would be considered a refund and is not forbidden by FHA loan | more...

January 24, 2017

Mortgage Rate Trends: Sharply Improved

By Joe Wallace

You may have noticed some extra coverage of mortgage rate trends in the last few weeks; rates have moved up and down in ways that seem to insist on added coverage, and Monday’s mortgage rate activity was definitely that. Rates recovered ground lost in the previous week and part of the reasons for that are also the reasons we saw higher rates in our last report; there is still a great deal of uncertainty among the markets and investors when it comes to economic policy, how the new administration will deal with overseas trade and other important issues. Mortgage rate trends currently reflect this uncertainty. Investors reacted to the earliest activity from the new regime in Washington D.C. and those reactions helped push mortgage rates lower. We’re now seeing a | more...

January 11, 2017

Income Documentation: A Reader Question

By Joe Wallace

A reader got in touch with us this week to ask a question about the FHA requirements for income documentation: “I work on a commission basis where a large part of my income does not appear on my w2. Say I make 4,000.00 in commission my expense to do my job is 1,000.00 my employer will write a check to me for that amount and them deducts it from my 4000.00 commission and then I am taxed on the remaining 3,000.00.” “I am at the end of the loan process and the underwriter is requesting a letter of explanation from the employer and she will not respond. Does she have to legally comply and how long can she take?” Unfortunately this falls dangerously close to asking for legal advice, and | more...

January 6, 2017

Down Payment: FHA Loan Rules

By Joe Wallace

How much do you know about FHA loan down payment requirements? If you’re feeling in the dark about this as a new house hunter, don’t feel bad-we take plenty of reader questions in the comments section about FHA home loans, but from time to time we get them not just from home buyers or sellers, but also from loan officers and others in the industry. There was a reader question this week from an “industry person” about down payments and the FHA loan rules associated with them. We like to point out in times like these that we are not affiliated with the FHA, HUD, or any other government entity, but we do where and know how to find the answers to questions like the following: “What about two brothersone | more...