Articles Tagged With: FHA Loan Limits

August 1, 2013

FHA No Cash Out Refinancing Loans With An Appraisal

FHA refinance loans include an option described in the FHA loan rules as a No Cash-Out Refinancing Loan With An Appraisal. These loans have rules that govern all aspects of the loan from the amount of the maximum mortgage amount (see below) and how much a borrower can receive in cash at the closing of the loan (the borrower may not receive cash back in excess of $500 at closing according to HUD 4155.1 Chapter Three Section B). How much is the maximum FHA loan amount for no cash-out refinancing loans? According to HUD 4155.1, “The maximum mortgage for a no cash out refinance with an appraisal (credit qualifying) is the lesser of the 97.75% Loan-To-Value (LTV) factor applied to the appraised value of the property, or existing debt.” Additionally, | more...

July 31, 2013

FHA Loan Answers: Alimony and Child Support as Verifiable Income

By Joe Wallace

FHA loan rules say that a borrower’s income must be verified in order for it to count when the lender makes debt-to-income ratio calculations necessary for approving (or denying) the mortgage loan. Verifiable income is defined basically as earnings that are stable, reliable, and likely to continue. A borrower’s full or even part-time employment would count in most cases. But the money a borrower makes, for example, by selling items on eBay, would likely not pass the “stable” or “likely to continue” requirements. When it comes to non-job “income” such as child support or alimony payments, FHA loan rules make provisions that allow this income to be counted under the right conditions. A borrower does not have to declare child support income under the Fair Housing Act, but it is | more...

July 11, 2013

FHA Streamline Refinance Loans With Appraisals

By Joe Wallace

FHA refinancing loans include something known as a Streamline Refinance option; the FHA Streamline Refinance allows a borrower with an existing FHA mortgage to apply for refinancing to lower mortgage rates or monthly payments. No cash back is permitted and no FHA-required credit qualifying is needed. Additionally, FHA Streamline loans have no FHA-required appraisal. But what about situations where there IS an appraisal with an FHA Streamline Refinance? FHA loan rules for no-appraisal streamline loans describe the maximum loan amount as follows: “The maximum insurable mortgage for streamline refinances without an appraisal cannot exceed the outstanding principal balance • minus the applicable refund of the UFMIP, • plus the new UFMIP that will be charged on the refinance. Note: The outstanding principal balance may include interest charged by the servicing | more...

July 3, 2013

FHA Loan Reader Questions: FHA Rules on “Flipping”

By Joe Wallace

A reader asks, “Hello, can you help us with a couple of questions please. What does the FHA consider as a “Flip-it” property? How many days does this involve from an original sale of a property?” “Flipping” is defined by the FHA as the sale of a home purchased with an FHA loan within 90 days of the original sale. Under normal circumstances the FHA has anti-flipping rules in place that forbid this practice with homes purchased with an FHA-insured mortgage. But the FHA issued a waiver to these rules back in January 2010. It has since been extended more than once and the current waiver of FHA anti-flipping rules doesn’t expire until 2014. According to a November 2012 edition of The Federal Register, “FHA is extending the availability of | more...

July 2, 2013

FHA Loans and the Cash Needed At Closing Time

By Joe Wallace

When it’s time for you to close your FHA home loan, you’ll be required to pay cash up front for certain items not to be included in the loan amount. These items include Up Front Mortgage Insurance Premiums or UFMIP, and the down payment. But there’s also an issue related to any “per diem interest” that might occur if the loan did not close on the original date agreed upon. When it comes to that per diem interest, borrowers should know the FHA loan rules (spelled out in HUD 4155.1) governing the money paid at closing time. Chapter Five of HUD 4155.1 states: “The lender must use a minimum of 15 days of per diem interest when estimating prepaid items on the Good Faith Estimate (GFE). To reduce the burden | more...

June 28, 2013

FHA/HUD Announce Relief For Alaska Flood Victims

By Joe Wallace

The FHA and HUD have issued a press release announcing relief for victims of recent flooding in Alaska. According to HUDNo.13-100, released Thursday June 27, 2013, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of Alaska and provide support to homeowners and low-income renters forced from their homes due to recent flooding.” This assistance came after the President made an announcement declaring parts of Alaska affected by the flooding to be federal disaster areas. According to the press release, “President Obama issued a disaster declaration for Alaska Gateway Regional Educational Attendance Area, Copper River Regional Educational Attendance Area, Lower Yukon Regional Educational Attendance Area, Yukon Flats Regional Educational Attendance Area and Yukon Koyukuk Regional Educational Attendance Area.” The federal | more...

June 3, 2013

FHA Credit Score Rules

By Joe Wallace

We’ve gotten a lot of reader questions lately about FHA loan standards for credit, FICO scores and more. Many readers want to know what the FHA FICO score requirements are and whether their credit reports are good enough to qualify for an FHA mortgage. There are two important things to understand about FHA loan credit requirements. The FHA loan rules spell out the minimum FICO scores required by the FHA; those minimums are found in HUD 4155.1 Chapter Four, Section A. According to the FHA, “The table below describes the relationship between the borrower’s minimum credit score and the maximum loan-to-value (LTV) ratio for which he/she is eligible.” The FHA minimum for maximum financing is listed in the table above at 580. But many borrowers don’t understand that the FHA | more...

May 24, 2013

FHA Loan Reader Questions: Buying a Home After a Short Sale

By Joe Wallace

A reader asks, “I did a short-sale last year, with total debt forgiveness and no delinquency judgement. I never missed a payment the 8 years I held the mortgage. It did not effect my credit which is currently 737.” “The bank did however report the short sale to the credit bureau and now I’m told it will be an issue getting an FHA loan. Lender says one thing, actual FHA website says another. I’m confused and discouraged. Advice?” The real issue here seems to be a disconnect between what the FHA loan rules say and the lender’s standards. If the FHA requires a certain minimum, but the lender has a higher standard, who is right? What standard is used to determine whether or not the loan can be approved? FHA | more...

May 21, 2013

FHA Loan Reader Questions: Foreclosure and the Three-Year Waiting Period

By Joe Wallace

A reader asks, “I had a home that Foreclosed in 2009. The Sheriff Sale was completed in December 2009, however according to the FHA office the claim on my home was not closed out until a little over a year later on January 14, 2011.” “Which means that instead of being in a position for another FHA Loan in 2012 we have to wait until January 2014, which is considered to be over 4 years since the Sheriff Sale. Why would it take so long between the Sale and the actual closing of the claim on the house? Is there anything I can do other than wait until 2014?” While we can’t address why it takes so long between a foreclosure and the sheriff sale, we can address the portion | more...

May 8, 2013

FHA Loan Reader Questions: Down Payments

By Joe Wallace

A reader asks, “I have applied for an FHA loan. However, the home price is over the FHA limit in our area. We have enough money to get to the maximum loan amount, but we are not clear if that will be sufficient or if we will still need an additional 3.5% on top of that?” “As an example only – Let’s say the house costs $365,000 but the maximum FHA loan amount is $330,000. If we put down 35,000 to bring the loan amount to $330,000 will we still be required to put down more money?” The answer to this question is a bit complex, but we’ll quote the FHA loan rules word-for-word for maximum clarity. According to the FHA loan rulebook, HUD 4155.1 Chapter Five Section B, “Under | more...