Articles Tagged With: FHA Home Loans

June 5, 2014

FHA Loan Reader Questions About Credit Issues

In response to one of our earlier posts, FHA Loan Credit Report Rules, a reader asks, “So if you have bad credit you can’t get approved by FHA? I thought the whole point of FHA was to help people with credit issues buy a home….” The key to understanding the FHA loan program’s requirements in this area is to know what the FHA loan rulebooks says about credit in general, and creditworthiness of the FHA loan applicant. According to HUD 4155.1, Chapter One, Section A, the lender or underwriter is responsible for making sure the loan applicant is able to repay the loan and willing to do so based on credit scores, credit history and related factors: “The purpose of underwriting is to • determine a borrower’s ability and willingness | more...

May 23, 2014

FHA Loan Requirements For Occupancy: What The Rulebook Says

By Joe Wallace

When you want to purchase a home using a single-family FHA home loan, you should know what the FHA loan program’s requirements are for occupancy of the property. Did you know you are required as a borrower to certify you’ll use the home as your personal residence? FHA loan rules in HUD 4155.1 explain these rules and how they apply to the borrower. There are many questions about occupancy including whether or not a borrower can purchase a single family home and rent out individual rooms, or whether a multi-unit property can be obtained and rented out. Essentially, the FHA single-family home loan program rules state the following: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property | more...

May 21, 2014

FHA Loan Down Payment Rules: Acceptable Sources

By Joe Wallace

In a recent blog post we were asked about FHA down payment requirements–is there such a thing as a “no down payment” FHA loan? Some borrowers might mistake the VA loan program’s zero down payment option for something the FHA officers, but the truth is that FHA loans require a minimum of 3.5% down for single-family home loans. Not only that, but the money for your down payment has to be documented and come from an acceptable source. The reason for this is twofold–it prevents borrowers from over-leveraging themselves with cash withdrawals or cash advances on credit cards (credit card cash advances can’t be used to make down payments on an FHA home loan) and it keeps people with a financial interest in the transaction from loaning money for the | more...

April 17, 2014

HUD and the City of Dubuque, Iowa Settle Discrimination Case

By Joe Wallace

A recent press release at the FHA/HUD official site announced a settlement in a racial discrimination complaint brought by HUD against the city of Dubuque, Iowa. The FHA/HUD press release HUDNo.14-034 says HUD and the city of Dubuque have reached an agreement to end a practice which HUD alleged discriminated against people based on race. “The U.S. Department of Housing and Urban Development (HUD) announced today an agreement with the city of Dubuque, Iowa, settling allegations that the City discriminated against African Americans in the administration of its Housing Choice Voucher Program…The agreement announced today is the result of a review HUD conducted in June 2011, which found that Dubuque imposed policies that discriminated against housing choice voucher applicants based on their race.” What were those policies? According to the press | more...

April 3, 2014

FHA Loan Reader Questions: Bankruptcy Waiting Times

By Joe Wallace

A reader asks, “I was pre-approved for a FHA loan in February and now that I have made an offer on a house, the loan company is saying I have to wait three years after my bankruptcy to qualify. Can you give me the length of time I have to wait for a FHA loan?” FHA loan rules for mandatory waiting periods after a bankruptcy depend on a variety of factors including the type of bankruptcy. In some cases a borrower may need the court’s permission to enter into a new loan agreement, and in others there may be no choice but to wait out the minimum required time. But the most important thing to understand about FHA loan bankruptcy requirements is that as long as the lender observes the | more...

April 2, 2014

FHA Loan Reader Questions: “Low Income” Loans For Modular Housing/Mobile Homes

By Joe Wallace

A reader asks, “I am on disability and receive a fixed income of 788.00 monthly. I would love to be able to get a loan for a mobile or modular home. Can I be qualified for a low-income loan?” Single-family FHA loans don’t have income requirements in terms of minimum or maximum incomes per se. It’s a common misconception that you must earn a minimum amount of money or NOT earn too much money to qualify for an FHA mortgage. But if there are no minimums and no maximums, how do participating FHA lenders determine who qualifies for an FHA single-family home loan? The borrower’s income and monthly obligations are analyzed to see if the borrower can afford the loan. If a borrower’s debt-to-income ratio is within the right tolerances | more...

March 12, 2014

FHA Loan Answers: Can I Skip Payments On My Mortgage If I Refinance?

By Joe Wallace

When considering your FHA home loan refinance options, there’s a list of common questions many borrowers need answers to before deciding on the right FHA refinance loan. One such question involves the state of the current mortgage before the new loan is approved. Can a borrower skip a payment on an FHA or conventional mortgage as the new FHA refinancing loan is approved? FHA loan rules address this issue in HUD 4155.1, Chapter Three, Section A. It says: “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes. Example: If the borrower is closing on April 8, he/she must have made the March payment within the month of | more...

March 5, 2014

FHA Loan Reader Questions: Can I Get Cash Back On My FHA Home Loan?

By Joe Wallace

A reader asks, “When you getting a FHA loan can you have some money in the bank for the hard days to come in case something happens in the future unexpectedly?” It seems as though the reader is asking if the borrower can apply for an FHA home loan in excess of the amount required for purchase and put that money in the bank for later use. FHA loan rules are clear for new purchase home loans–there is no cash back to the borrower permitted. FHA home loans for new purchases require a minimum cash investment of 3.5%, so the down payment issue would further complicate the issue if a “no cash out” policy weren’t in place. Borrowers are not only required to make a down payment for FHA home | more...

February 25, 2014

FHA Home Loans: What The FHA Will And Won’t Approve

By Joe Wallace

If you’re looking for an FHA guaranteed home loan, it can be a very big help to know in advance what kinds of properties the FHA will and won’t approve loans for in its single-family home loan program. There are sometimes misconceptions about the FHA single-family home loan program; some borrowers are interested in loans for commercial buildings or properties, but single-family home loans are intended for purchasing a dwelling for the borrower’s personal use. The FHA’s list of approved and unapproved uses for an FHA mortgage make it fairly obvious how these loans can be used, but if you’re new to the program those details aren’t always as clear. You can save a lot of time knowing up front what’s allowed under the FHA mortgage program. The rules for | more...

February 4, 2014

FHA To Widen Acceptance Of Electronic Signatures On Home Loan Documents

By Joe Wallace

The FHA and HUD have issued a press release announcing a wider acceptance of electronic signatures on FHA loan documents. According to HUDNo.14-11, the FHA is granting “expanded authority to lenders to accept electronic signatures (e-Signatures) on documents associated with mortgage loans. The new policy allows e-Signatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, REO sales contracts and related addenda. Current FHA policy allows for electronic signatures only on third party documents such as sales contracts and other documents not controlled by the lender” according to the press release. “By extending our acceptance of electronic signatures on the majority of single family documents, we are bringing our requirements into alignment with common industry practices,” said FHA Commissioner Carol Galante in the release. She adds, | more...