Articles Tagged With: FHA Home Loan

March 29, 2016

FHA Loan Rules For Debt Calculation: Installment Loans, Revolving Charge Accounts

It’s easy to forget that FICO scores are not the only credit issue lenders will examine when reviewing your FHA mortgage loan application. A lender isn’t just concerned with your scores; your ability to repay the loan and make your monthly mortgage payment requires a review of a potential borrower’s income and debt. The lender has different standards depending on the type of debt. For example, changes to FHA loan rules published last year require the lender to take student loan debt into account–even if the loan isn’t payable yet. Such debts are known as “deferred obligations” and if no monthly payment is available, the lender must take a percentage of the total debt to make the monthly payment estimation. FHA loan rules in HUD 4000.1 also include standards for | more...

March 29, 2016

FHA/FDIC Advice On Interest-Only Loans, Adjustable Rate Mortgages

By Joe Wallace

We discuss a lot of aspects of the FHA home loan process, but sometimes it’s a very good idea to go right to the source–the FHA itself–to get the agency’s take on certain aspects of the FHA loan process. The FHA official site–www.FHA.gov–has some good advice for borrowers contemplating their loan options including interest-only loans and adjustable rate mortgages (ARMs). What does the agency say to potential borrowers about these kinds of loans? One of the first pieces of advice is along the basic lines of, “do your homework, and be sure to read the fine print”. The FHA official site actually directs readers to look at another official government website–the FDIC official site–for some sound advice on how to approach the mortgage loan process where ARMs and interest-only mortgages | more...

March 28, 2016

FHA Loan Questions: Student Loan Debt

By Joe Wallace

We get many questions about FHA loans in the comments section. Recently we’ve fielded several queries about student loan debts and how they relate to FHA mortgage loan approval. Once reader asks, “What about student loans, that are ‘in school’, and not even due and payable? We tried to get the Income Based Repayment, from the servicer, and they told us the loans are not due payable yet, therefore they can not be calculated for the Income Based Repayment. That doesnt seem fair. The statement says they are not due for 5 years, and then an additional 6 months after I graduate.” FHA loan rules in HUD 4000.1 address student loans that have not yet come due as “deferred obligations” which page 180 of HUD 4000.1 describes as, “liabilities that | more...

March 24, 2016

HUD Offers Grants to Clean Up Lead Paint Hazards in the Home

By Joe Wallace

When you buy a home with an FHA mortgage, one of the appraisal requirements that must be met on certain older homes is that there must be an awareness of potential lead paint hazards in the property. A home that was built prior to 1978 may contain lead paint, and HUD 4000.1 page 115 states clearly: “If the Property was built before 1978, the seller must disclose any information known about lead-based paint and lead-based paint hazards before selling the house, in accordance with the HUD-EPA Lead Disclosure Rule (24 CFR 35, subpart A, and the identical 40 CFR 745, subpart F). For such Properties, the Mortgagee must ensure that: –the Borrower has been provided the EPA-approved information pamphlet on identifying and controlling lead-based paint hazards (Protect Your Family From | more...

March 18, 2016

Mortgage Loan Interest Rate Trends: Improving

By Joe Wallace

Thursday saw a decisive move lower for interest rates. After many days of upward movement, and some recovery earlier in the week following a Fed announcement (one that had no talk of another rate hike for now) it seems that rates are headed back down. This trend is being described by some market watchers as a delayed reaction to the Fed–are some lenders slower to update their mortgage loan interest rates due to recent volatility in the market? That’s what some are thinking. 30-year fixed rate conventional mortgages are now operating in a best execution range between 3.625% and 3.875%. That is a wider range than previously reported, though you will find variation among conventional lenders and your access to these rates depends greatly on your financial qualifications. (“Best execution | more...

March 17, 2016

FHA Loan Advice: Know Your Costs, Interest Rates

By Joe Wallace

We give a lot of advice both here and in our comments section about FHA home loans. And there’s a lot to give; FHA loan rules cover everything from the acceptable minimum condition of the home to a borrower’s credit requirements for maximum financing. But what does the FHA itself, as a government agency, say about the home buying process? Our publication is not associated with the FHA in any way, and what follows is the result of our research and examination of FHA-published material. What we have found is definitely information a potential borrower should consider during the planning stages of a new home loan or refinance loan. An FHA publication titled, Looking For The Best Mortgage has some excellent overall advice for the borrower starting with the old | more...

When Is An FHA Loan Better Than A Conventional Loan?

March 9, 2016

FHA Loan Rules in HUD 4000.1 on Maximum Loan Amounts

By Joe Wallace

When the FHA and HUD published HUD 4000.1, that document became the comprehensive rule book for FHA single family home loans and refinance loans. Many policies were updated, amended, altered or restated and there’s no way to compare all the changes with the previous version of FHA home loan rules found in HUD 4155.1 and HUD 4155.2. With that in mind we have been examining important sections of HUD 4000.1 to learn what the most up-to-date FHA loan policies are. Today we’re examining the FHA loan rules for maximum loan amounts. HUD 4000.1 begins this section by explaining the basics: “A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits, the nationwide area mortgage limit, or the maximum Loan-to-Value (LTV) ratio. The maximum LTV ratios | more...

March 8, 2016

FHA Loan Rules For Home Sales: HUD 4000.1

By Joe Wallace

The FHA Single Family Mortgage Loan program is regulated by the rules published in HUD 4000.1. These rules cover everything from appraisal requirements and FICO score minimums to Fair Housing requirements and responsibilities. HUD 4000.1 also establishes requirements for the home loan transaction–for example, did you know FHA mortgage loan rules have specific parameters for who can sell the property to the borrower purchasing with an FHA mortgage? HUD 4000.1 clearly states: “To be eligible for a mortgage insured by FHA, a Property must be purchased from the owner of record. The transaction may not involve any sale or assignment of the sales contract.” How is the lender required to establish that the seller is the owner of record? FHA loan rules say the lender must, “obtain documentation verifying that | more...

March 3, 2016

Settlement Reached In Kansas “Redlining” Mortgage Discrimination Case

By Joe Wallace

The Department of Housing and Urban Development (HUD) has announced a settlement in a mortgage discrimination case involving First Federal Bank of Kansas City. According to a press release at the FHA/HUD official site, “The U.S. Department of Housing and Urban Development (HUD) announced today an agreement with First Federal Bank of Kansas City to resolve allegations of redlining against African American mortgage applicants. HUD and two fair housing organizations claimed the lenders designated service area effectively excluded African American neighborhoods, limiting residential mortgage lending to persons based upon their race.” Federal law makes it illegal to discriminate against mortgage loan applicants or anyone seeking housing because of their race. According to the press release, “Homeownership should never be affected by the color of a persons skin. This agreement helps | more...

February 29, 2016

FHA Loan Rules in HUD 4000.1: Gaps In Employment, Temporary Reductions of Income

By Joe Wallace

HUD 4000.1 is the FHA loan rule book for single family home loans and refinance loans. This rule book includes instructions to the lender on how to process FHA loan applications and how the lender should treat specific circumstances that can affect a borrower’s chances for FHA loan approval. Naturally these rules are FHA loan minimum standards and lenders may have additional requirements, but the basics for FHA loan approval are addressed. These basics include instructions to the lender on how the FHA views application issues such as having frequent gaps in employment or temporary reductions of income. What do these situations do to a borrower’s chances for FHA loan approval? HUD 4000.1 addresses the frequent gaps in employment issue directly, stating: “For Borrowers with gaps in employment of six | more...