Articles Tagged With: FHA Home Loans

November 22, 2013

FHA Refinancing Loans With an Appraisal

Borrowers interested in a non-streamline, credit-qualifying FHA refinance loan that features no cash back to the borrower will be interested in knowing some of the basics of this option including the maximum mortgage loan possible and details of the Up Front Mortgage Insurance Premium requirements. The rules that govern these types of refinancing loans are found in HUD 4155.1 in Chapter Three. Borrowers should note that there is no fixed single dollar amount limit for an FHA loan–your loan amount is determined by the fair market value of the home (which is determined by an appraisal) and your loan amount can be affected by the FHA loan guaranty limits in your county, plus any approved add-ons to the mortgage. When it comes to percentages, however, there are specific numbers. According | more...

November 17, 2013

FHA Single-Family Loan Rules For More Than One Loan

By Joe Wallace

FHA loan rules for single-family homes are designed to prevent investors from using these loans to buy more investment properties. An FHA borrower applying for a single-family home loan under the FHA program is required to use that home as the principle residence, and cannot buy, then turn around and vacate the property in order to rent it out. According to FHA loan rules found in HUD 4155.1, “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will | more...

October 9, 2013

FHA Loan Reader Questions: Do I Qualify For an FHA Mortgage With “Confusing Circumstances”?

By Joe Wallace

A reader asks, “I am formerly self employed with little if any income and own a home purchased prior to marriage and I have a 700+ FICO and perfect debt payment history. My husband is formerly self employed (5 years) and for 6 months now has been re-employed with former employer which laid him off during economic down turn. Husband has little or no credit history. With his rehire we will have to transfer. I don’t know if we can qualify for a home with the rather confusing circumstances. I don’t want to access my credit to find out we don’t qualify. What are our options?” The simplest, most direct answer to this type of reader question is “Call the FHA”. In situations like these, it’s a very good idea | more...

September 25, 2013

FHA Loan Modification Rule Changes

By Joe Wallace

Borrowers who get into financial difficulty and have trouble making payments on their FHA home loans have some options with the FHA that can help the borrower avoid foreclosure. The FHA has updated its rules to home loan modifications and other foreclosure avoidance procedures–those updates are found in FHA Mortgagee Letter 13-32. We recently discussed some of the initial changes, which the FHA has given lenders until December 2013 to make. That recent update includes some instructions to the lender regarding loan forbearance. “Before a mortgagee considers a delinquent mortgagor for one of FHA’s Loss Mitigation Home Retention Options, the mortgagee must first evaluate the mortgagor for both Informal and Formal Forbearance Plans…Informal and Formal Forbearance Plans are the only options available for delinquent mortgagors without verifiable losses of income | more...

July 23, 2013

FHA Loan Minimum Property Requirements: Where Are They Found?

By Joe Wallace

A reader asks, “We are looking into an FHA loan but our I know our house is not totally in code with the FHA/HUD guidelines. Such as railings needed if steps are 2 feet or higher. Is there somewhere that I can find these guidelines so that we can start?” FHA minimum property requirements are found in HUD 4910.01, Minimum Standards For Housing. But there is a very important factor to be considered–FHA loan rules are not the only standards a home must live up to. Anyone who wants to spend time and money fixing up a home to make sure it is in compliance with FHA loan minimum standards must also make sure the home is within state, local or otherwise applicable building codes. FHA appraisals on homes that | more...

February 22, 2013

FHA Loan Reader Questions: What Is Needed To Qualify?

By Joe Wallace

A reader asks, “What is needed to qualify for a FHA loan?” That is a very general question–almost too general, but there is one very important starting point borrowers should know about when getting started with the FHA home loan process. Credit history is a major part of any home loan and some types of FHA refinancing loans. Without a solid record of on-time bill payments for at least one year or more, a lender is hard-pressed to justify approving a mortgage credit application. Let’s examine with the FHA loan rulebook says about credit. According to HUD 4155.1, Chapter One, Section A, the home loan underwriting process pays a lot of attention to credit issues. “The purpose of underwriting is to determine a borrower’s ability and willingness to repay a | more...

February 8, 2013

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “My credit score is 678. When my husband tried to get his FICO score, he was told he couldn’t because he did not meet the minimum scoring requirements. (He is just starting to build credit and has nothing). Will we be able to qualify for an FHA loan based on my credit score?” FHA loan rules have a lot to say on this. In HUD 4155.1, you’ll find the following under the section titled Analyzing The Borrower’s Credit: “Neither the lack of credit history nor the borrower’s decision not to use credit may be used as a basis for rejecting the loan application. We also recognize that some prospective borrowers may not have an established credit history. For those borrowers, and for those who do not use | more...

January 31, 2013

A Reader Question on FHA Minimum Property Requirements

By Joe Wallace

A reader asks, “Would a home that is missing just the cabinet doors in the kitchen qualify for FHA? It has the everything else, its just the doors that are missing.” From time to time we get questions like these that reference specific conditions in a home. Will X make my home ineligible for an FHA mortgage? Does Y disqualify the property? In answering these questions there are two important aspects to consider. One is whether or not a specific condition is described in FHA minimum property standards. Some are, but many more are not. For example, a home located in certain flood zones may not qualify for an FHA mortgage. A home with standing puddles of water in the basement or a leaky roof may require corrections or repairs | more...

January 16, 2013

FHA Loan Rules For Applications: Your Tax Returns

By Joe Wallace

As part of the home loan application process for FHA insured mortgages, applicants are required to furnish a set of paperwork that includes tax documents. According to the FHA loan rulebook, HUD 4155.1, in a section titled “Federal Income Tax Returns”, the rules tell the lender to get the applicant’s: • federal income tax returns for the most recent two years, both individual and business, including all applicable schedules, for self-employed borrowers, and • individual federal tax returns for commissioned individuals. ” The phrase “all applicable schedules” refers to things like Schedule C and other forms required. If you don’t know what Schedule C is, you likely have not needed to file one. (It’s for borrowers who report business income or self-employment income. FHA loan rules also state that the | more...

January 11, 2013

FHA Loan Credit Issues: A Reader Question

By Joe Wallace

A reader asks, “I have poor credit. I am a single mother of 4 and need to buy a bigger home. I have noticed reading several posts, that the lowest credit score FHA will accept is 580. Is this true in every case? After I was divorced my credit score dropped, big time. Everything was divided in court but at the time I was not working and it ruined my credit.” The answer to this question is likely one the reader doesn’t want to get. The reader asks if the FHA minimum credit score requirement is true in every case, and the short answer is “No”. However, the reason is due to the lender’s additional requirements for credit scores, not a more lenient loan policy on the FHA’s part. The | more...