Articles Tagged With: FHA Home Loan

June 30, 2023

Is an FHA Home Loan Right For You?

Mortgage loan interest rates have increased significantly since hitting all-time lows in years past. In 2023, some renters are now wondering whether it’s smarter to rent or own in the current housing market. Some can afford to wait to buy until the rates return to a consistently lower range, but others have to buy soon, no matter what the state of the housing market. FHA Loans Versus Conventional Loans And for these borrowers, FHA loans, being government-backed, often feature interest rates and terms competitive with some conventional alternatives. They can also be competitive with conventional loans when it comes to terms. No penalty for early payoff, the ability to refinance with an FHA Streamline should conditions make that option more viable, and a lower down payment requirement are all features | more...

June 26, 2023

Is It Possible To Have Multiple FHA Loans?

By Joe Wallace

Many people want to know if they can apply for more than one FHA loan at a time. In some cases this is because the potential borrower wants to buy a home they don’t intend to use as their primary residence. In others, the issue might be that a larger home is needed due to a change in family size. Are these reasons for having more than one FHA loan valid under FHA loan rules? What FHA Loan Rules Say FHA loan rules for the single-family home loan program in the FHA Single-Family Handbook generally permit FHA loans only for owner-occupiers. The short answer to the question, “How many FHA loans can I have at the same time?” is ONE. The home must be occupied by at least one person | more...

June 22, 2023

FHA Loan Rules For Income: Investments, Trusts, and Promissory Note Payments

By Joe Wallace

Part of the FHA loan approval process involves the lender verifying an applicant’s income. FHA rules state that for purposes of calculating a borrower’s debt-to-income ratio, only verifiable income can be counted in that ratio. Do FHA rules allow a borrower’s interest or dividend payments from investments to be counted as verifiable income? For some borrowers, this can be an important question. According to the FHA Lender’s Handbook, “The Mortgagee must verify and document the Borrower’s Investment Income by obtaining tax returns for the previous two years and the most recent account statement.” Additional instructions to the lender for this issue include the requirement that when making the calculation. “The Mortgagee must subtract any of the assets used for the Borrower’s required funds to close to purchase the subject Property | more...

June 16, 2023

FHA Loans For Mixed-Use Property

By Joe Wallace

A common reader question about FHA mortgages has to do with purchasing mixed-use property with an FHA loan. Here is a variation on the theme: “I want to buy a 4-unit building with a store front. Is there any type of loan that I can apply for to make this purchase?” The good news is that this type of purchase may be possible; FHA loan rules permit the purchase of properties between one and four units. For mixed-use property, commercially zoned residential property or other non-traditional purchases, HUD 4000.1 states: “The non-residential portion of the total floor area may not exceed 49 percent. Any non-residential use of the Property must be subordinate to its residential use, character and appearance.” “Non-residential use may not impair the residential character or marketability of | more...

Conventional Loan Interest Rates Make History, FHA Loan Rates Still Incredibly Low

June 15, 2023

FHA Loans and Interest Rates: The Interest Rate Lock

By Joe Wallace

Under the rules of the FHA loan program, borrowers and lenders negotiate together on interest rates for the FHA loan. Part of those negotiations is the interest rate lock agreement. This can feel intimidating for some who aren’t used to the home-buying process, but it’s a common part of the home loan transaction. What do you need to know about FHA home loan rates and getting a rate lock commitment from your lender? The FHA does not set interest rates, and it’s also not responsible for regulating them aside from a general requirement that the rates be comparable to similar types of loans. Interest rates on mortgages and other high-value transactions are under more scrutiny in 2023 due to continued elevated mortgage rates. At the moment, it’s good to explore | more...

June 12, 2023

Is Summer The Best Time For House Hunting?

By Joe Wallace

When is the best time of year to search for your new home? Spring and summer are the most comfortable times to look, but those who put up with a little inconvenience from the cold and late-year inclement weather may save more than they realized thanks to a more eager seller. It always pays to look for a home when the buying season is in full swing, but you may have more options than you think by extending your house hunt into fall and winter if necessary. Buying A House During House Hunting Season (Spring and Summer) Yes, the weather is better, potential buyers can take a leisurely look around the property, and the overall experience may be more pleasant. But there is more competition for homes in the good | more...

June 2, 2023

FHA Home Loan Pre-Approval And Mortgage Loan Approval

By Bruce Reichstein

If you are considering an FHA home loan it is a smart idea to get pre-approved for a home loan before you start house hunting. If you are new to the home loan process, you might not be sure what the difference is between FHA loan approval and getting pre-approved for an FHA mortgage. What is that difference? Getting through the initial pre-approval application does not mean you’ve been fully approved for the mortgage. But it IS an important tool for soon-to-be homeowners. Home loan pre-approval is a tool for both borrower and lender to determine if you’re ready to buy based on your income, debt to income ratio levels, the amount of down payment you have saved, etc. Think of pre-approval as the start of the loan process, but | more...

May 30, 2023

FHA Home Loan Down Payment Rules in 2023

By Joe Wallace

What must you know about the down payment requirement for an FHA mortgage? FHA home loans have specific rules about the amount of your down payment and where it can come from. Knowing the down payment rules before you start saving for your home loan may make the entire process more efficient, especially if you know you’re required to give the lender the sources of your down payment money and document it accordingly. FHA Loan Rules: Down Payments Are Different From Other FHA Loan Costs Some want to know if their down payment requirement can include the money they pay toward closing costs, lender fees, or earnest money. But such costs do not count as part of your down payment amount; you must provide funds for your entire down payment | more...

May 25, 2023

Do FHA Loan Payments Increase Over Time?

By Joe Wallace

Could the monthly amount due on an FHA mortgage increase over time? If you want a fixed-rate mortgage, that may seem like a silly question. After all, isn’t the idea behind a fixed-rate home loan to provide predictability and stability in the payments? The short answer is yes, but there are still factors that could change the total amount of mortgage-related expenses over time. Depending on circumstances, the amount you owe each month may change depending on variables such as changes in your insurance, property taxes, and homeowner’s association fees. Adjustable Rate Mortgages Your monthly mortgage payment will change if you have an Adjustable Rate Mortgage or ARM loan. An ARM loan features an introductory period with a (typically lower) “teaser” rate, but once that introductory period ends? The home | more...

April 20, 2023

Five Things You Should Know About FHA Mortgages

By Joe Wallace

Many people still have misconceptions about the FHA home loan program. They might think they “earn too much money” to be a successful applicant (not true, FHA home loans are not need-based loans) or would not qualify because they want to build a home instead of buying an existing-construction house. This is also not true; FHA loans include those for building a home instead of buying one. They are called One-Time Close construction loans, and feature the same FHA FICO score and down payment requirements as other FHA mortgage options. What are the facts about FHA home loans you need to know to make a better-informed decision about your loan choices? FHA Loan Fact: FHA Mortgages Are For Any Financially Qualified Borrower Unlike the USDA home loan program, which DOES | more...