Articles Tagged With: FHA Loan Application

May 16, 2017

FHA Loan Application Data: What You Should Know

The FHA single family loan program rule book, HUD 4000.1, has a variety of rules and instructions to the lender on how FHA loan application information is to be handled and processed. You might not think those rules affect you as an applicant, but some of the rules do pertain to how the lender must collect the borrower’s information and the approved sources of that information. Your credit scores and other data must be given to the lender from approved sources. Did you know that HUD 4000.1 does not permit the borrower to handle or transmit certain kinds of information to the lender? Your loan officer is responsible for making sure she gets the information from the proper sourcing. According to HUD 4000.1: “Mortgagees must not accept or use documents | more...

How much can I borrow with an FHA refinance loan?

April 24, 2017

Are You Ready For An FHA Mortgage?

By Joe Wallace

Are you ready to apply for an FHA mortgage in 2017? There are several areas that borrowers should spend plenty of time examining before filling out paperwork or online forms to apply or get pre-approved for a mortgage loan. Credit Reports If you do not know what your lender will see when she pulls your credit report, there’s a good chance you are not ready to fill out FHA loan paperwork. Why? Because if there are errors on your report, questions over certain accounts that may need to be disputed or contested, evidence of identity theft, those will all need to be dealt with before you apply for your loan. A lender can work with a borrower who has disputed accounts still pending (assuming the lender’s standards permit) but if | more...

August 5, 2016

FHA Loan Questions: Personal Data

By Joe Wallace

A reader asks, “Must income verification documents include sensitive information, such as account numbers, full SS# and bank account number(s). Can verification be made with sensitive information being Blacked-Out or omitted, as to not expose ones self to possible criminality?” FHA loan rules require the lender to verify personal information including Social Security Numbers, bank account numbers, credit reports, etc. So the lender will definitely be required to have that information at the bank’s disposal to verify not only the identity of the borrower, but also the sources of down payment funds and other money as governed by HUD 4000.1. HUD 4000.1, page 111 instructs the lender, “The Mortgagee must obtain the Borrowers authorization to verify the information needed to process the mortgage application. The Mortgagee must obtain a non-borrowing | more...

July 27, 2016

FHA Loan Questions: Income Verification

By Joe Wallace

A reader asks, “I threw out my pay stubs not knowing that I would be purchasing a home this soon. Is there anything else that can be used in place of pay stubs to get approved for an FHA loan?” “I provided copies of my last four pay checks, a statement from my employer showing my cumulative earnings so far this year, my original W2s from 2014 and 2015, my federal and state taxes from 2014 and 2015, and three months worth of bank statements that show the direct deposit from my employer every two weeks for those three months.” In general, you may find that tax documentation, current pay stubs, and bank statements COULD provide an acceptable substitute, depending on the lender. However, this is a situation that requires | more...

May 5, 2016

FHA Loans and FICO Scores: Fact and Fiction

By Joe Wallace

Some potential FHA borrowers have questions about FHA loan credit score requirements. It’s easy to hear part of story when it comes to other people qualifying for an FHA mortgage and assume you’ve gotten all the facts, but the reality is that FHA loan rules and credit score requirements aren’t the whole picture. Lender standards also have a say in loan approval. That is why FHA loan rules, which specify a FICO score starting at 580 (for maximum financing), don’t have the final say. Lender standards also apply, and those standards (provided they are applied in accordance with federal law) will also factor into the application process. An FHA loan fact: FICO scores below 500 are not permitted. An FHA loan fiction: Anyone with a FICO score in the mid | more...

March 1, 2016

FHA Loan Rules: , Student Loans, Co-Signing and “Contingent Liabilities”

By Joe Wallace

We’ve gotten a variety of questions in the comments section in early 2016 about FHA loan rules for student loans, co-signing, and how the FHA loan program rules view things like deferred obligations and contingent liabilities. Those two terms can be a bit confusing, so it’s good to know what they are and how they can affect your FHA loan application. A deferred obligation is basically any arrangement that resembles a student loan deferment where an amount is owed, but the payment for that obligation may be reduced or delayed as part of an arrangement made between the lender and borrower. In cases where this type of debt is concerned, HUD 4000.1 states that the loan officer must: “…use the actual monthly payment to be paid on a deferred liability, | more...

December 14, 2015

HUD 4000.1 On Appraisal Expiration Dates

By Joe Wallace

Ever since the FHA and HUD published the new FHA single-family mortgage loan rule book, HUD 4000.1, we’ve been examining important sections of the rules to see what current FHA mortgage loan policy is; FHA and HUD announced there would be no comparison document outlining the myriad of changes from the old guidelines to new and that it was the reader’s responsibility to learn what current policy might be for any given FHA loan topic. With that in mind we started reviewing HUD 4000.1 and discussing important issues. One such issue is the FHA’s rules on appraisal expiration dates. FHA appraisals are generally valid for 120 days, but the rules in HUD 4000.1 add: “The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 | more...

December 1, 2015

FHA Loans And HUD 4000.1: What The Lender Must See In Your Credit Report

By Joe Wallace

Ever since the new FHA home loan rules for single-family mortgage loans were published in HUD 4000.1, we have been reviewing the new rules and publishing some of the most pertinent changes in policy, restatements of existing policies, and new FHA home loan rules. The FHA and HUD did rewrite, revise, and change portions of the rulebook to update, improve, or clarify those sections. One area that’s important to know about HUD 4000.1 is its instructions to the lender about credit reports. Do you know what the lender must look for, according to HUD 4000.1, in your credit report? To begin with, HUD 4000.1 instructs the lender, “Credit reports must contain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in | more...

September 22, 2015

FHA Loans And Federal Debt

By Joe Wallace

Here is a common type of question about applying for an FHA mortgage loan when you have owe a debt to the federal government: “Can anyone tell me what the guideline for FHA loans regarding payment plan with IRS when you do not own property and you owe taxes? ” FHA loan rules here are basically concerned with giving lenders a yardstick to measure a borrower’s creditworthiness with regard to federal debt–and that means that a lender is responsible for insuring the borrower is not delinquent on the payments of that debt. Borrowers who are delinquent and are shown to be delinquent through the lender’s due diligence are not eligible for an FHA mortgage loan until such time as they have corrected the delinquency to the satisfaction of the government. | more...

When Is An FHA Loan Better Than A Conventional Loan?

September 2, 2015

FHA Loan Questions: Late Payments Prior To Loan Application Time

By Joe Wallace

We get plenty of credit-related questions about FHA home loans and refinance loans in our comments section. One recent question that came in has to do with late payments on financial obligations prior to filling out an FHA mortgage application. The reader mentioned having late payments in the last year in addition to having a credit score in the mid-500s. “Can this affect my chances for FHA loan approval?” is the most common of questions, and naturally the answer is dependent on circumstances. In general, FHA loan applications are best turned in when the borrower has a solid 12 months of on-time payments for all financial obligations. Borrowers with otherwise outstanding credit and/or “compensating factors” may find a lender more forgiving if there is an issue with credit history, but | more...