Articles Tagged With: FHA Loan Application

July 18, 2012

FHA Loan Qualifying Factors–The Relationship of the Mortgage Payment to Gross Income

When a borrower applies for an FHA home loan, the lender must analyze the applicant’s debt-to-income ratio in order to approve the loan application. That ratio is basically described in FHA loan rules as the amount of verifiable income versus the amount of debt the borrower has. But that’s not the only factor in the equation when the lender is trying to insure the borrower is a good risk for an FHA mortgage loan. According to the FHA official site, the lender must establish whether the borrower can afford his or her current financial obligations AND the amount of the new obligations under the FHA mortgage. According to Chapter Four of the FHA loan rules (HUD 4155.1), “The relationship of the mortgage payment to income is considered acceptable if the | more...

July 13, 2012

HUD Charges Minnesota Condo Association and Management Company With Fair Housing Act Violations

By Joe Wallace

In spite of federal laws, conventional, VA, and FHA loan applicants sometimes experience discrimination when house hunting. While the most obvious types of discrimination involve bias against race, religion, sexual orientation, or national origin, there’s another type of discrimination that’s just as illegal and unfair–discrimination based on family status. According to a press release issued by the Department of Housing and Urban Development, a Minnesota condominium association and its management company, Gassen Company, Inc., have been charged by HUD with violating the Fair Housing Act, “by discriminating against families with children under the age of 18”. The press release says, “According to HUD

July 11, 2012

FHA Loan Reader Question: Appraisals and “Comparables”

By Joe Wallace

A reader asks, “I am interested in purchasing a log cabin home with 44 acres and I am being told by a lender that FHA requires the comparables must be within a 12 month sale time frame. As you know log cabin homes are not sold that often. Do the comparables have to be within a 12 month time frame like I am being told?” “Comparables” refers to a benchmark FHA appraisers use to help arrive at the fair market value of the appraised property. The appraiser compares the property to be purchased with an FHA home loan to similar homes in the same market to see what current market values might be for those properties. In Issue 30 of the official FHA Appraiser Roster Newsletter, comparables are discussed as | more...

July 10, 2012

FHA Announces Disaster Assistance For Minnesota Storm Victims

By Joe Wallace

The FHA and HUD have announced disaster relief for victims of severe storms and flooding in parts of Minnesota. According to an FHA press release dated July 9, 2012, “Last week, President Obama issued a disaster declaration for Aitkin, Carlton, Cook, Crow Wing, Dakota, Goodhue, Kandiyohi, Lake, Meeker, Pine, Rice, Saint Louis, and Sibley Counties. The declaration also includes Fond du Lac, Grand Portage and Mille Lacs Indian Reservations. The President

July 6, 2012

FHA Announces Disaster Relief For Tropical Storm Debbie Victims

By Joe Wallace

A press release found on the FHA official site announces federal disaster assistance for victims of Tropical Storm Debbie in the state of Florida. According to HUDNo.12-110, President Obama has issued disaster declarations in several counties including Baker, Bradford, Clay, Columbia, Franklin, Hernando, Highlands, Pasco, Pinellas, Suwannee, and Wakulla. The President

July 5, 2012

FHA 203(b) Home Loans: How Do They Work?

By Joe Wallace

If you’re a first time home buyer interested in getting an FHA loan, there are several options you can choose from when you’re ready to commit to buying a home. Home loan experts recommend preparing for any new home purchase at least a year in advance so you have time to save money for the costs of the loan you need to pay up front, examine your credit score, and reduce any unnecessary open lines of credit. Once you’re ready to start house hunting, you have options that include getting pre-qualified for an FHA loan amount, or finding a suitable home and applying for the loan once you’ve made your choice. FHA loans work because participating lenders offer mortgage loans to qualified borrowers. The FHA itself does not lend the | more...

June 28, 2012

FHA Loan Reader Question: Checking Credit Scores

By Joe Wallace

A reader asks, “I did have bad credit at one time but I would say I have good credit now. I found out I had 2 things against me but I have taken care of them, they were small amounts but they would be the only thing against me over the past 5 years. I have paid off a car that I paid for over 5 years and also several small loans.” “I am buying a mobile home through the owner but I want to build a house on some property that I own and I am not sure about my credit score and wanted to know if there is any way of finding out if I would be eligible for an FHA loan without applying for the loan and | more...

June 25, 2012

FHA Home Loans and “Qualifying Ratios”

By Joe Wallace

One frequently asked question about FHA home loans goes something like this: “Why do different banks seem to have different standards for FHA home loans?” It’s a legitimate question–some lenders require different credit scores than others, some are stricter about certain types of credit issues or require longer wait times after bankruptcy or foreclosure. Why? The FHA loan rulebook for lenders, HUD 4155.1, has a section in Chapter Four called “Qualifying Ratios” which can help borrowers understand why some of these variances may occur. Every bank has its own set of standards, based on the need to effectively manage risks in lending while allowing credit access to the largest number of qualified borrowers the company can support. What do the FHA rules require a lender to take into consideration when | more...

June 21, 2012

FHA Loan Rules For Employment and Income

By Joe Wallace

FHA home loans require the borrower to submit employment information to the lender for verification. This is done for several reasons to include documenting the borrower’s income, stability of that income, and how long that income has been ongoing. FHA Loan rules, as described in HUD 4155.1 Chapter Four, Section D, state the following about income and employment: “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrower

June 13, 2012

Reader Question: FHA Loan Credit Requirements

By Joe Wallace

A reader asks: “The FHA approves people with poor credit. I see on the website that FHA is getting home loans, can you tell me what are your credit guide lines?” FHA loan rules establish minimum credit requirements for loan approval, but borrowers should know that it’s a mistake to assume an FHA guaranteed mortgage is a “bad credit home loan” or similar products. Banks that participate in the FHA loan program have their own credit requirements–they are not forced to issue home loans to borrowers that don’t meet the financial institution’s minimum credit score requirements for home loans even if the borrower technically meets the FHA minimum credit score cutoff. That’s one reason why borrowers are encouraged to contact the FHA directly (1-800-CALL FHA) to learn about and arrange | more...