Articles Tagged With: FHA Loan Application

April 17, 2015

FHA Home Loans: What Is CAIVRS?

In our last post, we answered a reader question about trouble with an FHA home loan associated with information found in the CAIVRS system. One of the important aspects of that reader question is the definition of what CAIVRS is and how data found in that system could affect an FHA mortgage loan application. The FHA official site has a Frequently Asked Questions section that addresses CAIVRS, which stands for Credit Alert Verification Reporting System. This is a system maintained by the federal government that, as the FHA official site explains, “lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government.” Examples of what the | more...

April 2, 2015

FHA Home Loan And Refinance Loan Options

By Joe Wallace

If you have never explored your FHA loan options before, you should know what your options are for both refinance loans and new purchase loans. Did you know that FHA mortgages have, in most cases, a lower down payment requirement than conventional loans? The credit-qualifying rules for FHA loans and refinance loans is also more lenient than many conventional loans. For new purchase loans, the type of property you can buy with an FHA mortgage is flexible. You can buy a typical suburban-style home, a condo unit, a mixed use building that is primarily residential in nature, and even a farm home (the loan would be for the residence only). Some lenders may also be willing to issue loans for manufactured housing or modular homes. The type of loan you | more...

April 2, 2015

Commission Income And FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “I made 41000 in 2013 and 65000 in 2014 I am on pace to making over 100000 this year. How will they calculate my income for an FHA loan. I am a saleried and I get commission.” The participating FHA lender is required to calculate the applicant’s income and verify that it is likely to continue–not all income can qualify to be used in figuring out the borrower’s debt-to-income ratio, only “verifiable income”. Commissions can and often are counted as verifiable income for the purpose of FHA loan approval, but that income must meet specific criteria. Borrowers who earn commission must have, in general, been earning the commission for a year or more. The FHA loan rules listed in HUD 4155.1 explain such requirements for verifiable commission | more...

March 27, 2015

FHA Loan Reader Questions: FICO Scores and Down Payment

By Joe Wallace

A reader sent us a question via our comments section recently, asking: “I HAVE A CREDIT SCORE OF 591, I HAVE WORKED FOR MY JOB FOR 18 YEAR. I WOULD LIKE TO PURCHASE A HOME AND AM WORKING ON MY CREDIT WITH MY CREDIT UNION. WHAT MORTGAGE COMPANY WOULD WORK WITH ME TO GET A HOME? I DON’T HAVE MONEY FOR A DOWN PAYMENT”. Unfortunately, FHA home loans do not offer a zero downpayment option. FHA loan rules found in HUD 4155.1 states clearly that a “minimum borrower cash investment” or downpayment is required. The minimum down payment on any new purchase FHA home loan is 3.5% of the sale price or appraised value of the home (whichever is lower). That information is found in HUD 4155.1 Chapter Five Section | more...

March 24, 2015

Basic FHA Loan Eligibility Requirements

By Joe Wallace

We get many questions about FHA loans–questions about FICO score requirements, questions about credit and income, residency, etc. The FHA official site (www.fha.gov) has many answers to these questions–but what ARE the basic requirements for an FHA mortgage? FHA loan rules specify a minimum FICO score needed to qualify for maximum financing, and a minimum FICO score for basic eligibility with a larger down payment in cases where the applicant’s FICO score is close to the margins of acceptability. “FHA insures mortgages” the official site says, “made by approved lenders to individuals and nonprofit and government agencies that are approved to participate in HUD’s programs; HUD does not loan money to homebuyers.” The FICO score requirements mentioned previously (580 for maximum financing, and FICO scores above 500 for program eligibility | more...

March 18, 2015

FHA Loan Assumptions: A Reader Question

By Joe Wallace

A reader asks, “Myself and my brother bought a house together in 2010, and now my brother and his adult son (nephew) would like to assume the mortgage and remove me of any obligation instead of going through the process/cost of buying/selling. Is this possible with an FHA loan?” A home purchased with an FHA mortgage loan may be assumed by another party under certain conditions. The FHA/HUD official site says the following about FHA loan assumptions: “Assumption of an FHA-insured mortgage is a servicing function where the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process. Individuals may assume mortgages originated prior to December 1, 1986, by utilizing the “Simple Assumption” process.” “For those mortgages originated on December 1, 1986 and thereafter, HUD | more...

March 11, 2015

Disputing Bad Credit Information Before Applying For An FHA Loan

By Joe Wallace

A recent article published by Marketplace reports that disputing bad credit information on your credit report is going to be easier than in years past. According to the article titled, “Disputing bad credit is about to get a whole lot easier”, “The nation’s three biggest credit reporting companies—Experian, TransUnion, and Equifax—are changing the way they collect and report the credit scores. The changes involves the way bureaus handle credit-rating disputes, as well as how they report unpaid medical bills.” That can be a big help for borrowers who need to deal with credit agencies or manage credit applications while dealing with medical expenses. According to the article, “Under the Fair Credit Reporting Act, all credit error claims are entitled to a ‘reasonable investigation’. In practice however, that wasn’t happening. Chi | more...

March 11, 2015

FHA Loans and Debt-To-Income Ratio: A Reader Question

By Joe Wallace

A reader asks, “Our daughter and son in law are trying to obtain a FHA loan. They are only using my son in law for the loan because our daughter’s credit score is too low. However his income/debt ratio is too high because of a car loan.” “We have agreed to pay off the car to lower the monthly income/debt ratio. Their combined income is enough to cover the mortgage and pay us back. How will this affect their loan application?” Unfortunately, there’s no clear way to address this question for a variety of reasons. There are many variables including whether or not the couple resides in a community property state, where state law will have a say in how the lender may or may not consider the FHA loan | more...

March 7, 2015

FHA Loan Rules: Employment Verification

By Joe Wallace

When you want to apply for an FHA home loan, the lender will give you forms to complete that include requests for information on your past and current employment. Employment history is an important part of the FHA loan application review process and the lender is required to verify your employment by contacting your place of work. But what do FHA loan rules specifically require? HUD 4155.1 has the guidelines for lenders. Chapter One Section B of HUD 4155.1 instructs your lender: “The lender is required to verify the applicant’s employment history for the previous two years. However, direct verification is not required if all of the following conditions are met: • the current employer confirms a two-year employment history (this may include a pay stub indicating a hiring date) | more...

March 5, 2015

FHA Loan Income Verification–What You Should Know

By Joe Wallace

If you are considering an application for an FHA loan or an FHA refinance loan, you might wonder about some of the details of your application. One area some get concerned over is the income and employment section–specifically how the lender will verify both income and employment. When it comes to your income, the lender will request pay stubs–your most recent verification of deposit or other proof of income that can function as a pay stub. In most cases the lender will request documentation that is the most current, but in some cases can be no more than 120 days old. For employment verification, the lender will contact the employer (or request added documentation if you are self employed). According to the FHA loan rules found in HUD 4155.1, the | more...