Articles Tagged With: FHA Loan Application

August 31, 2015

FHA Loan Rules: Divorce and Separations

We frequently handle reader questions in the comments section regarding FHA loan policies that affect borrowers going through a legal separation or divorce. In some cases, the questions have a lot to do with why a lender may require the spouse’s credit information or other details even though the couple is legally separated. One recent question addressed just that-the FHA loan applicant was being asked by the lender about spouse credit issues even though there was a legal judgment or ruling stating the couple was legally separated and not involved in joint credit or shared debt according to the terms of the legal agreement. Why would the lender, the reader wondered, still require the spouse’s financial or credit information? Unfortunately, there is no one specific answer to give. Some states | more...

August 17, 2015

Qualifying Income For FHA Loans: Required Paperwork

By Joe Wallace

We’ve written in recent weeks about the process of verifying income for an FHA home loan–the nature of your employment, additional income, and other financial factors that might contribute to your debt to income ratio are required to get scrutinized by the lender. The lender’s process for verifying income is spelled out in HUD 4155.1 Chapter One Section B, but there’s one part of the rules we haven’t covered in our other blog posts–the Verification of Deposit requirement. Chapter One Section B states that the lender must get documentation in writing for all “assets to be used in qualifying” for the FHA mortgage. Borrowers should expect to furnish verification in writing for the last three months worth of qualifying at a minimum. The borrower can provide either a written Verification | more...

August 3, 2015

Applying For An FHA Loan

By Joe Wallace

When you apply for an FHA home loan, what is your lender going to require of you besides the information you put on the application itself? Some requirements may vary from lender to lender, but in general you will need to be prepared to furnish bank statements, tax data, and information on any additional sources of income you want to be counted along with your primary earnings. The lender will ask for tax data for a variety of reasons, but the tax data is especially important if you are an independent contractor, freelancer, or small business owner. Your bank statements can also be important–the lender may require two months or more in order to get a more complete picture of your spending habits. Your income needs to be verifiable–any part | more...

July 21, 2015

Self-Employed, Contractor, Or Employee? It Matters When You Apply For An FHA Loan

By Joe Wallace

A recent article posted at CNN Money raises some interesting FHA loan questions regarding the difference between workers who act as independent contractors and those who work as employees. FHA loan rules require more job and income related information from FHA loan applicants who are self-employed or who work as part of a family business. These borrowers may need additional tax data and may need to submit profit and loss statements and related details that can help a lender verify the applicant’s income and employment. According to the CNN Money article titled, “When an independent contractor is really an employee”, there’s a large number of recent lawsuits that, “allege companies should not be classifying workers as free agents. For example, last month a California commission ruled that an Uber driver | more...

What happens to my FHA loan in a natural disaster?

June 25, 2015

FHA Loan Debt To Income Ratios

By Joe Wallace

Are you concerned about your debt to income ratio going into the FHA loan application process? Do you wonder how your chosen FHA lender will view your existing debts and whether debts that are scheduled to be paid off at some point in the near future might affect your FHA loan application? It helps to know what the FHA loan rulebook says about a borrower’s overall credit worthiness. At the time of this writing, the FHA and HUD are preparing to transition to a new FHA loan rulebook, but the previous references still apply until then. On the FHA official site you will find HUD 4155.1, which includes a section in Chapter Four about how the lender is to analyze the borrower’s credit. That section says in part: “When analyzing | more...

June 8, 2015

Things To Do Before Applying For Your FHA Home Loan

By Joe Wallace

If you are in the planning stages of your home buying journey, there are some important milestones you should plan for–things that are crucial to think about before you start filling out your home loan application. One milestone is deciding how much home you can afford to buy. This seems like an obvious move for many reasons, but the amount of your down payment is one factor you shouldn’t overlook when using a home loan calculator or other tools to figure out how much you can spend. When you add up the numbers and arrive at a target home loan amount that’s appropriate to your income level and ability to afford (based on both the amount of the projected mortgage payments AND that amount added in with your current financial | more...

June 5, 2015

FHA Home Loan Rules For Foreign Nationals

By Joe Wallace

FHA home loan rules include guidance for participating lenders who are handling FHA loan applications submitted by non-U.S. citizens. Did you know that according to FHA loan rules, it is not required to be a U.S. citizen in order to apply? However, certain restrictions do apply. According to HUD 4155.1 Chapter Four, Section A, “U.S. citizenship is not required for mortgage eligibility”. However, all applicants must have a valid Social Security Numberr (SSN). That is according to the FHA/HUD official site FAQ section, which states: “For all borrowers, including US citizens, the lender is required to document a valid Social Security Number (SSN) for each borrower, co-borrower, and co-signer on the mortgage. All individuals eligible for legal employment in the US must have a SSN. Each borrower must provide the | more...

May 21, 2015

FHA Refinance Loans, Appraisals, and Refunds

By Joe Wallace

A reader asks, “I closed a cash out refinance in December 2014. The term was a fifteen year at 4.75%. I received a flyer from my lender in February that offered a 3.25% rate. I decided to inquire about a thirty year term as circumstances had changed significantly after the first of the year with my wifes job. The lender sent me a GFE and we locked in the rate. After a short while I was told I had to pay for another appraisal and basically resubmit all of the paperwork that I had previously sent to the lender. As of three months later I still have no refinance and am out of pocket over $500.” “Is this legal to open two FHA cases within two months and why was | more...

May 7, 2015

FHA Loans And The Credit Review

By Joe Wallace

We get many questions about FHA loan applications–questions that involve credit, FICO scores, FHA loan standards, and more. Many borrowers aren’t sure about whether they have FICO scores high enough to qualify for an FHA mortgage, and others may wonder if having a history of late or missed payments could hurt their chances at an FHA home loan. In general, borrowers are encouraged to wait to apply for an FHA mortgage until they have 12 full months of on-time payments on all financial obligations. This brings a potential home loan borrower closer to FHA loan approval; anything less can put your loan application in danger. Why? It’s good to know the FHA stance on these issues, and the FHA loan rulebook does spell out the reason why such a premium | more...

April 18, 2015

FHA Loan Rules For Income: Is There A Maximum Limit?

By Joe Wallace

A reader asks, “I was prequalified for an FHA loan and during escrow, my agent said I made too much money to be eligible for the loan. Does that make sense?” The simple answer to this question is no, the notion that a borrower makes too much money to qualify for an FHA mortgage loan does not make sense. But let’s examiner what official FHA and HUD documents say about the single-family FHA loan program: “If you are buying a home, refinancing a mortgage for a home you already own, or making home improvements, you may qualify for an FHA-insured mortgage. In fact, almost anyone who has a satisfactory credit record, enough cash to close the loan, and sufficient steady income to make monthly mortgage payments can be approved for | more...