Articles Tagged With: FHA Loan Limits

October 31, 2012

FHA Energy Efficient Mortgages: Is Escrow Required?

When learning abo0ut FHA home loans, escrow is one issue some borrowers have questions about. The FHA frequently asked questions pages include the following about escrow, which is governed by something called the Real Estate Settlement Procedures Act or RESPA: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must maintain an escrow account for the purpose of paying taxes and other items. The HUD regulations only limit the maximum amount that a lender can require a borrower to maintain in an account.” That Q&A from the FHA official site seems to indicate that the FHA does not require escrow; indeed, it is the lender’s choice to require escrow or not. But are there situations where an escrow account may actually | more...

October 30, 2012

FHA Warning On Scams Related to the National Mortgage Settlement

By Joe Wallace

In early 2012, a landmark mortgage settlement between five major lenders and the U.S. government was reached after complaints were filed regarding home loan abuses and foreclosure abuses. According to a Department of Justice press release dated March 12, 2012, “The Justice Department, the Department of Housing and Urban Development (HUD) and 49 state attorneys general announced today the filing of their landmark $25 billion agreement with the nation

October 26, 2012

Are You Eligible For an FHA Mortgage?

By Joe Wallace

FHA loans are sometimes misunderstood–some people think FHA mortgages are only for low-income families, others wrongly assume only first-time home buyers can qualify for an FHA loan. The FHA does provide a list of guidelines that list who is eligible–and who is not–to apply for an FHA mortgage or refinance. The FHA loan rules include guidelines on credit scores and minimum age–which we discuss below. The rulebook that describes these things is called HUD 4155.1. In this guideline you’ll find the following: “FHA insures mortgages made to individuals with valid Social Security numbers (SSN), and under the conditions described in this section, to state and local government agencies, and approved nonprofit organizations. Note: Employees of the World Bank, foreign embassies, etc., may not be required to have an SSN. Conclusive | more...

October 23, 2012

FHA Loan Reader Questions: Bankruptcy and Foreclosure

By Joe Wallace

A reader asks, “My bankruptcy has been discharged for 3 years but the house has not been foreclosed on yet. Can I get an FHA loan?” There are several unanswered questions here that don’t allow a definitive answer. The nature of the bankruptcy (Chapter 7 or Chapter 14) plays a part in the answer. Is the house in foreclosure now? More information is needed to provide a clear answer. In general, FHA loan rules do require a “seasoning period” for bankruptcy and foreclosure. A home that is currently in foreclosure will likely interfere with a borrower’s attempts to get a new home loan of any kind. A home purchased with a government-backed loan that has been foreclosed upon may result in the borrower being indebted to the government. VA loans, | more...

October 19, 2012

FHA Loan Income Requirements: Myths and Reality

By Joe Wallace

Income is a topic that comes up in frequently asked question about FHA loans. Some potential borrowers are misinformed about the nature of FHA mortgages; they think the program is only for the financially disadvantaged. Can a borrower earn too much to qualify for an FHA home loan? Is there a “ceiling” for the amount of income you can earn and still apply for an FHA guaranteed home loan? No. According to the FHA and HUD, “FHA’s mortgage programs do not typically have maximum income limits for qualifying, although you must have sufficient income to qualify for the mortgage payment and other debts.” That’s not to say that there are NO income limits associated with FHA loans; “Income limits may be present when qualifying for down payment assistance or other | more...

October 18, 2012

Rules For Credit Reports Associated With FHA Loan Applications

By Joe Wallace

Some FHA loan applicants may consider the credit check something of a mystery. Borrowers should know and understand how the FHA loan application process works–including the credit check–as it can help better prepare the borrower for the preparation needed to get an FHA loan approved. What does the lender need–and get–from the credit check process? Many lenders rely on something known in the industry as the “three repository merged credit report” or TRMCR to gather the borrower’s credit information. According to FHA loan rules, this report must contain information on all credit inquiries made within the last 90 days, any credit and legal data “not considered obsolete under the Fair Credit Reporting Act (FCRA)” which may include the last seven years worth of information about bankruptcy, court judgments, lawsuits, tax | more...

October 9, 2012

FHA Loans and Credit Score Requirements

By Joe Wallace

Recently we posted a reader question about FICO scores and FHA loan approval. The reader wanted to know why a credit score range between 540 and 618 didn’t qualify for an FHA mortgage. The reader question included the following: “My scores are 618 – 595 – 540…why couldn’t I qualify for this loan?” There are two factors at work when viewing FICO scores. The lender is required to observe FHA loan minimums–which this reader was technically able to meet. But the lender is also required to observe the FICO minimums established by the financial institution. If the FICO score doesn’t meet the bank’s minimum, it’s not eligible for FHA loan approval. How does the lender interpret the three credit scores to determine eligibility if a borrower is right on the | more...

October 2, 2012

Is a Borrower Ever Automatically Ineligible for an FHA Home Loan?

By Joe Wallace

FHA home loans are designed to help eligible borrowers get into affordable mortgages. The general credit qualifying criteria and loan terms can be far more lenient than some conventional mortgages, and the FHA loan program has helped many who could not qualify for conventional loans because of large down payment requirements or other terms. But is there a time when a potential FHA loan applicant is automatically ineligible for an FHA mortgage? According to the FHA, the answer is yes. For the purposes of this blog post, we aren’t talking about those who have experienced a foreclosure or who have filed bankruptcy; after all, there is only a mandatory waiting period–the seasoning period–that must be waited out until such borrowers are eligible to apply again. They haven’t been forbidden from | more...

September 28, 2012

Foreclosure Avoidance Counsleing on FHA Home Loans: Should I Pay For Assistance?

By Joe Wallace

Aside from getting the FHA home loan itself, one of the most important benefits to having an FHA mortgage is the availability of free foreclosure avoidance counseling for home owners who need it. FHA.gov reminds borrowers that it is not necessary to pay fees to third-party foreclosure avoidance agencies. Plenty of free counseling and assistance is available from the FHA and HUD. On the FHA official site, under the page titled “Consumer Fees For Housing Counseling” you’ll find the following: “Foreclosure prevention counseling and homeless counseling services are available free of charge through HUD’s Housing Counseling Program. Housing Counseling agencies participating in HUD’s Housing Counseling Program are not permitted to charge consumers for these specific housing counseling services. (Emphasis ours.) Counseling recipients should not pay for these services.” That’s not | more...

September 24, 2012

FHA Condo Project Approval Guidelines Change: Homeowners Association Rules

By Joe Wallace

We’ve reported many new changes to the FHA condo approval process that allows a condominium project to be considered for an FHA loan for individual units. Condo projects must be FHA approved before a borrower can apply for an FHA guaranteed mortgage on a unit in that condo project; that means a project’s compliance with FHA loan rules is very important. For example, a condo project may not be approved for an FHA mortgage loan if there are restrictions on the borrower’s ability to freely sell the property. The FHA has gone back and forth on an issue related to “the right of first refusal” which limits a borrower’s ability to sell. Condo loan applicants have reported problems with the right of first refusal clause, getting turned down for FHA | more...