Articles Tagged With: FHA Loan Application

March 4, 2015

FHA Loan Approval or Rejection: The Notification Rules

When a borrower applies for an FHA home loan for the first time, it’s normal to wonder how long it might take and how the borrower might be contacted when the decision has been made. When it comes to the length of time to process the loan, there is no set answer–it can depend a great deal on the lender’s workload, how easy or difficult it is to track down a borrower’s credit information, etc. But once a decision has been made, FHA loan rules in HUD 4155.1 tell the lender how to proceed. Once the decision has been reached, FHA loan rules state, “The lender is responsible for notifying the borrower of the approval, either in writing or verbally, immediately after receipt of the underwriter’s decision.” That is found | more...

January 16, 2015

FHA Loan Reader Questions: Do I Qualify?

By Joe Wallace

A reader asks, “I wanted to know if I can qualify for any of FHA products for first time homebuyers:-My wife owns a home in her name only.-I am not listed anywhere on the deed, title, loan, etc-We currently live in her 2-bedroom home, but have outgrown it. We now have 2 kids and my mother is living with us.We would like to move to buy a new home, in my name only. I have never owned a home, however, my wife and I have been filing jointly for all of our tax returns (her property is listed on all of our tax returns). My wife plans to keep her current home as an investment property. So, do I qualify for a FHA loan, or any of your listed down payment assistance programs?” | more...

January 9, 2015

FHA Mortgage Loan Applications: A Reader Question

By Joe Wallace

A reader asks, “My husband and I live in Texas and want to buy a home. My husband makes around $40,000 a year and has decent credit. I am self employed so my tax return shows I only make around 25,000 a year after deductions. All of the debts are in my name and I have the better credit score. My question is, wouldn’t it be better to put the home loan in his name only being that he has no debt? Can we get an FHA loan in his name only?” It’s true that FHA loan rules differ for self-employed borrowers. You may be required to furnish additional documentation along with the usual FHA loan paperwork–profit and loss statements, business tax documents, anything that can show the borrower has | more...

October 2, 2014

FHA Loan Credit Report Requirements

By Joe Wallace

When you apply for a home loan, it helps to know what the lender is looking for from your credit report. When it comes to FHA mortgages, the lender wants to see 12 months of on-time payments on your financial obligations as well as the actual numbers of your credit scores as reported by the three major credit reporting agencies. But what does the FHA require from those credit reports? What does the lender need in order to properly document you as a good credit risk? The FHA loan rules for credit report delivery and content are found in HUD 4155.1 Chapter One Section C. A quick glance at this section reveals that credit reports cannot be delivered to the lender from third-parties including the borrower. The credit reporting agency | more...

September 12, 2014

FHA Down Payment Rules: When More Is Required

By Joe Wallace

We get frequent questions about FHA loan rules concerning down payments. Borrowers want to know how much money down the FHA requires for a single family home loan transaction, and unfortunately some borrowers mistakenly believe there is a single dollar amount that must be paid. The reality is that the required FHA down payment amount is a percentage of the loan rather than fixed dollar amount. That means every FHA loan down payment can be different depending on the transaction. Typically the FHA down payment requirement is 3.5%. That down payment requirement can be higher if the borrower has marginal credit qualifications that might force the lender to seek “compensating factors” in order to justify the loan. A bigger down payment can be one of those compensating factors. Another reason | more...

June 13, 2014

Quaifying Ratios For FHA Loans

By Joe Wallace

When you apply for an FHA home loan, one thing the lender must do is determine whether your income and monthly debts are such that you can afford the additional financial burden of the monthly mortgage payment. When these calculations are made, the “qualifying ratio” is a very important factor in loan approval. The rules for qualifying rations are found in HUD 4155.1 and there are two basic calculations to be made. One of them involves the borrower’s income versus his or her projected mortgage obligation. HUD 4155.1 says, “The relationship of the mortgage payment to income is considered acceptable if the total mortgage payment does not exceed 31% of the gross effective income.” There can be exceptions as provided by the rules in HUD 4155.1. “A ratio exceeding 31% | more...

June 11, 2014

FHA Loan Questions: Documents Required For Loan Approval

By Joe Wallace

There are sometimes questions about the nature of FHA loan application requirements. Some feel that the loan requirements are “intrusive” or are asking for too much personal data. Part of this sentiment comes from a lack of understanding of what the lender is required to do and provide under the rules of the FHA loan program. What does the FHA require of the lender in order to get a loan approved? Keeping in mind that a home loan is a major line of credit, it’s not surprising that the rules for income and employment verification, credit history and other things are more stringent than for smaller lines of credit like a credit card or cell phone account. For starters, the FHA requires all documentation to be current or at | more...

May 23, 2014

FHA Loan Debt Ratios and Student Loans: A Reader Question

By Joe Wallace

A reader asks, “My student loans are in my name, because my parents wanted to get my credit/payment history started early, but they pay the loans…It is a blessing that they pay them every month, but if I went to get an FHA mortgage for a first time home buyer would I have to count that $350.00 per month loan expense or could they write a letter or prove that they are actually the ones that get the bill and pay it? This really makes a difference when I check the amount I could potentially be approved for.” The answer to this question may depend on the lender, but in general the student loan debt is in the borrower’s name and that is the key to understanding the issue. The | more...

May 6, 2014

FHA Loan Reader Questions: Chapter 7 Bankruptcy and Credit Scores

By Joe Wallace

This reader comment raises some very important issues potential FHA borrowers should keep in mind when it’s time to apply for a new home loan, no matter whether applying in the wake of a bankruptcy or not. The reader says: “I was in Chapter 7 on 8/2011 and Discharged 2.5 years ago. I just applied for a loan and when my credit was pulled they found the loan of the home I own as a open account. This loan was closed for several years and it was just put back on in 2/2014 for no reason, which I have proof since I keep all my reports. I disputed it and it was taken off right away.” “Meanwhile it cleared up that problem showing the account closed but it left late | more...

March 28, 2014

FHA Loan Rules: Government Benefits and Assistance Income

By Joe Wallace

One of the most common questions we get about FHA home loans involves the borrower’s basic eligibility for the FHA loan program based on receiving government assistance or other types of government payments including: • military income • VA benefits • government assistance programs • mortgage credit certificates • Section 8 home ownership vouchers What do FHA loan rules say about these types of income? Can they be used to qualify for an FHA mortgage? Not all these types of payments are covered under one blanket rule. The different types of pay have different rules. For example, when it comes to military allowances above and beyond base pay, HUD 4155.1 Chapter Four says: “Military personnel receive base pay, and are often entitled to additional forms of pay, such as • | more...