Articles Tagged With: FHA Lenders

March 10, 2016

FHA Loan Standards: Charge-Offs and Collections

We’ve gotten several questions in the comments section about certain credit issues related to charge-offs, collections and other forms of derogatory credit information. With those questions in mind it seems like a good time to review the rules as published in HUD 4000.1 that instruct the lender on how to interpret these things and decide on loan approval. But before we start looking at the rules, it’s very important to point out that the information listed here are FHA minimum standards. A given lender or financial institution may have more strict requirements depending on circumstances, state laws, or other factors. Remember that FHA loan rules don’t override state law and lenders are free to require higher standards as long as they are in compliance with federal laws. When it comes | more...

August 6, 2015

Participating FHA Lenders: Direct Endorsement Versus Conditional Approval Authority

By Joe Wallace

There are two types of participating FHA lenders. One has “automatic authority” or “direct endoresement” (DE) authority to approve your FHA loan application in most cases, and the other has “conditional approval” authority which requires the lender to submit your FHA loan paperwork to the FHA for final review before the loan can be closed. FHA loan rules for these two different types. Found in HUD 4155.2 Chapter One Section A, we learn the following: “Under FHAs Direct Endorsement (DE) program, approved lenders may underwrite and close mortgage loans without FHAs prior review or approval. This includes all aspects of the mortgage loan application, property analysis, and borrower underwriting.” Chapter One includes a note, adding: “This assumes that the lender is a DE lender with unconditional approval. If the lender | more...

April 22, 2015

FHA Loans For Mixed Use Properties: A Reader Question

By Joe Wallace

Many of our reader questions posted in the comments section here come from loan applicants and home buyers, sometimes even sellers, all wanting to know more about certain aspects of the FHA loan process. But one recent question comes from a lender, who asks: “Customer had bankruptcy chapter 7- discharged 1-2012. Wants to but a home that has a convience store attached to it. Can I do the loan with 5% down and count the income from the store?” FHA loan rules for mixed-use property appraisals address this issue. HUD 4150.2 Chapter Three states: “A qualified property must be predominantly residential in use and appearance. Any nonresidential use of the property must be subordinate to its residential use, character and appearance. A property, any portion of which is designed or | more...

April 21, 2015

FHA Loan Closing Costs

By Joe Wallace

One common question asked about FHA home loans involves closing costs. Many FHA borrowers want to know how much to expect in the form of closing costs, but the simple answer to these question is, “it all depends”. Depending on what? No two housing markets are the same, and no two lenders are exactly the same either. The amount of closing costs you have to pay will vary based on these factors plus how state law may affect your transaction, possible property tax issues, how much is charged in your local area for certain services rendered, etc. Cost of services may vary, but the FHA has built in some protections for the borrower when it comes to those charges. HUD 4155.2 Chapter Six has some things to say about closing | more...

February 4, 2015

FHA Mortgage Rate Trends

By Joe Wallace

FHA mortgage loan interest rates have been holding at best execution levels of 3.25% for quite some time, and that’s despite ups and downs for 30-year fixed rate conventional mortgages. Late last week we saw rates for 30-year fixed rate conventional mortgages head, best executionwise, close to 3.5% for the most qualified borrowers. Overseas financial developments have helped keep rates as low as they’ve been–it’s a good idea to pay attention to the situation in Greece and news of the European Central Bank. These are factors that can affect rates in the short term depending on investor reaction to breaking news. On Monday of this week, those rates held steady more or less in spite of some lenders repricing higher, and on Tuesday it looked like the reversal of a | more...

January 12, 2015

FHA Loan Application Requirements: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are trying to pay off debt and raise our credit scores to buy a home. Is there a program to help with a down payment? What are the steps needed to get approved for fha loan?” The FHA itself does not provide a downpayment assistance program, but one may be available at a state or local agency. The FHA does have a list of state information that can help you learn what home buyer/home ownership resources might be available near you. You can look up this list at http://portal.hud.gov/hudportal/HUD?src=/states. Steps to an FHA home loan include planning and preparation–you should research the housing market where you want to purchase the home, examine homes for sale you want to purchase and other steps, but one | more...

August 7, 2014

FHA Loan Application Basics

By Joe Wallace

FHA loans are much like conventional loans when it comes to applying and qualifying. Like a conventional loan, your lender will need your credit, income, and employment history data to make a determination on loan approval. Where FHA loans stop being like conventional mortgages includes the amount of down payment required (the FHA has a much lower requirement in many cases), the interest rate (which can also be lower than conventional loans depending on circumstances) and occupancy rules. What are some of the basic things you need to know about FHA loan applications? First, it’s best to be careful when filling out your credit and employment information. Omitting or concealing past issues is not recommended. The lender will get a comprehensive picture of your credit history when looking at the | more...

September 23, 2013

FHA Loan Reader Questions: Credit Scores, Loan Limits and Mortgage Insurance

By Joe Wallace

A reader asks, “The insurance for fha does it include in your morgtage or you have to pay that together with the downpayment? Do you know before you pick the house the amount you qualify for? How hard is it after one year of bankruptcy? I was laid off and did not work for close to two years due to the economy. how hard is it to get a lender with a score of 580???? Can closing cost be included in mortgage? This is a lot of questions, but the first and most important question is the matter of FICO scores. The reader asks how difficult it is to get a lender when the borrower has a 580 credit score. We can’t speak for all lenders, but in general a | more...