Articles Tagged With: FHA Home Loans

July 14, 2017

What Is An FHA Loan And How Does It Work?

What is an FHA loan and how does it work? There are many differences between conventional and FHA mortgages, and those differences could mean significant savings depending on your home buying needs and goals. What An FHA Loan Is Not An FHA loan is a mortgage loan, first and foremost. It is intended to buy or refinance a property. An FHA “forward mortgage” or new home loan not intended to act as a personal loan, with cash back to the borrower at closing time. FHA loan rules don’t permit the borrower to apply for a loan greater than the adjusted value of the property plus additional costs that may be rolled into the loan. While your FHA mortgage may be greater than the total adjusted value of the property, you | more...

July 12, 2017

What Is An FHA Loan Down Payment?

By Bruce Reichstein

What is an FHA loan down payment? Simply put, your down payment on a home loan is an investment paid up-front which is separate from other loan expenses. The original idea behind making a down payment likely had something to do with the idea that a borrower who has invested a serious portion of cash up front on the home purchase has a greater interest in paying their mortgage, not defaulting on the loan, and being a successful home owner. FHA loan rules which govern the down payment are found in HUD 4000.1, the FHA loan handbook, and have plenty to say about the amount and sourcing of an FHA mortgage loan down payment. What Is An FHA Loan Down Payment? The FHA loan handbook describes the down payment, also | more...

July 11, 2017

When Is An FHA Loan Better Than A Conventional Loan?

By Bruce Reichstein

When is an FHA loan better than a conventional loan? Many potential FHA borrowers ask this question. Do you know how FHA loans stack up against their conventional loan counterparts? Purchase And Refinance The FHA Single Family Loan program features loans for both new purchases and refinancing. If you are considering a refinance loan in your home buying strategy, an FHA mortgage may be the right move for you. If you buy FHA and refinance FHA, you can take advantage of the FHA-to-FHA only Streamline Refinance loan to get into a lower mortgage payment and/or interest rates. We’ll cover the refinancing aspect of FHA mortgage loans more closely in another blog post. FHA Loan Interest Rates FHA home loans feature interest rates that are often competitive with their conventional loan | more...

July 6, 2017

Who Should Get An FHA Loan?

By Bruce Reichstein

Who should get an FHA loan? There are a variety of options with FHA mortgages, and depending on your financial goals and needs, you may find an FHA mortgage is the right choice for you, especially if you are interested in lower interest rates, and a more competitive down payment requirement. FHA Loans Are For Those Who Need A Lower Down Payment You should get an FHA mortgage loan if the idea of paying as much as 10% down doesn’t work for you. FHA mortgage loans require a minimum 3.5% down payment, which is based on the adjusted value of the property you are purchasing. It is important to know that your credit history will play an important part in determining your down payment in some cases; borrowers who have | more...

Credit Scores For An FHA Home Loan: When Low Credit Is Not Bad Credit

July 5, 2017

Who Are FHA Loans Good For? Part Two

By Joe Wallace

Who are FHA loans good for? We’re examining this issue to help clear up some myths and misconceptions about the FHA loan program including the notion that FHA loans are only intended for first-time home buyers (FHA loans are available to all financially qualified borrowers) and the idea that FHA mortgages have an income limit that prevents those with greater incomes from applying (not true). Who Are FHA Loans Good For? FHA loans are good for both first time buyers and those who have returned to house-hunting after owning property. For second-time house hunters (and beyond) the most important thing to remember is that FHA loans have an occupancy requirement and you can only purchase a primary residence with an FHA loan. No timeshares, vacation homes, or other “occasional occupancy” | more...

July 5, 2017

Who Are FHA Loans Good For?

By Bruce Reichstein

Who are FHA loans good for? It’s an excellent question and the answer might surprise you. FHA mortgages are often thought of as “helper loans” due to a misconception that FHA mortgages are specifically for first time home buyers, economically disadvantaged people, or new families. What’s the truth? FHA Loans Are Available To All Financially Qualified Applicants There is no minimum income limit OR “maximum income” cutoff for FHA home loans. A borrower cannot earn “too much money” and be disqualified as a result. FHA home loans are for anyone who meets the minimum FICO score requirements, has a reliable payment history on all financial obligations, and can show that their employment is stable and likely to continue. FHA Loans Are For All Types Of Borrowers Some mistakenly believe that | more...

July 3, 2017

What Is An FHA Cash-Out Refinance Loan? Part Two

By Joe Wallace

What is an FHA cash-out refinance loan? These types of loans are designed to help the borrower draw equity out of the property being refinanced. Once the original loan is paid off, and the new loan’s fees are covered, the remaining cash comes back to the borrower for any purpose acceptable to the lender. Cash Back, LTV Limits FHA cash-out refinance loans are different than FHA Streamline Refinance loans, which are restricted to FHA-to-FHA transactions and don’t allow any cash back except refunds. FHA cash-out refi loans are “appraisal required” and feature an LTV limit. That limit is 85% of the adjusted value of the home. There is also a mortgage limit found in the cash-out refi rules in HUD 4000.1: “The combined mortgage amount of the first Mortgage and | more...

Get A Free Credit Report Before Applying For An FHA Loan

June 28, 2017

What Are My Restrictions On FHA Loan Assumptions?

By Joe Wallace

Restrictions on FHA loan assumptions aren’t terribly complicated, but if you are interested in assuming an FHA loan there are some things to keep in mind, starting with a requirement that the lender participates in the process. Most FHA mortgage loans closed in recent years will require the lender’s approval and participation in order to successfully assume an FHA loan. But there are other considerations, too. For example, a home purchased with an FHA mortgage on what the FHA handbook describes as “Indian Land” requires the approval of the local tribal authority. According to HUD 4000.1: “The Mortgagee cannot approve an assumption of a Mortgage secured by a Property located on an Indian Land/reservation unless the Indian Tribe has approved the assumption or sale of the rights to the Property | more...

Can my seller pay some of my closing costs?

June 21, 2017

FHA Loan Income Requirements

By Joe Wallace

How much or how little can you earn and still qualify for an FHA loan? Do you know what the FHA loan income requirements are for the type of mortgage loan you seek? The truth is, the FHA home loan program does not specify a minimum (or maximum) dollar amount necessary to qualify for an FHA home loan or FHA refinance loan. Instead, the lender is required to make sure you qualify with FICO scores, credit history, and an acceptable debt-to-income ratio. FHA Debt To Income Ratio There are two ways your participating FHA lender will review your income compared to your financial obligations in order to qualify you for an FHA mortgage. The first is to review the amount of verifiable income you bring in and compare it to | more...

June 20, 2017

FHA Jumbo Loans

By Joe Wallace

FHA Jumbo Loans, also known as non-conforming loans, are mortgages that exceed the county limit for mortgage loans in that area. FHA home loans in excess of these limits (also known as FHA loan limits) are possible, but there are some important factors you should know about before applying. FHA Jumbo Loans Are Like “Standard” FHA Mortgage Loans Some borrowers want to know if they can apply for an FHA Jumbo Loan that exceeds the value of the home and take the remainder of the mortgage loan out in cash at closing time. FHA home loans are specifically designed to prevent cash back to the borrower at closing time except in the form of legitimate refunds. If you paid cash for something up front that was later financed into the | more...