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Articles Tagged With: FHA Loan Limits

March 8, 2012

FHA Home Loan Down Payment Rules–Payment Sources

By Joe Wallace

FHA new purchase home loan programs, where the borrower is buying a new or pre-owned home, require the borrower to make a minimum down payment of 3.5% of either the appraised value of the property or the asking price of the home, whichever is lower. FHA loan down payments are strictly regulated, and not just with the percentage required to put down as the minimum cash investment. Did you know the FHA also requires documentation on the source of the down payment money depending on circumstances? FHA rules state documentation is required when the borrower pays more than 2% of the sale price. It

 

March 7, 2012

FHA Loan Rules: Down Payments

By Joe Wallace

There are several government-backed home loan programs available for qualified borrowers. Some programs are for a specific set of people, such as the VA insured loan program for eligible veterans, while others like the FHA insured mortgage loan program are intended for any qualified borrower. There’s sometimes a bit of confusion between VA loan rules and FHA home loan regulations because the two programs are insured by the government, albeit by different agencies. VA home loans, for example, feature a no-money-down option that is sometimes mistaken for a feature of the FHA home loan program. Occasionally we get a reader question asking if the FHA loan program offers a similar no down payment FHA mortgage or if first-time FHA loan applicants are required to make a down payment. All FHA | more...

 

March 1, 2012

Why Was I Rejected For An FHA Home Loan?

By Joe Wallace

We get many reader comments and questions about FHA insured home loans. Many of them involve the loan process, appraisal procedures and refinancing issues, but some people ask us why they were turned down for an FHA loan, or want to know about the rules concerning loan approval and denial. When an FHA home loan applicant is denied a loan, there are several things which must happen. Many borrowers rightly want to know the specific reasons they were turned down for a home loan and whether it’s possible to try again after addressing the concerns which led to having the FHA loan application denied. Did you know the lender is required to inform the borrower not only as to the reasons why the loan was turned down, but in some | more...

 

February 28, 2012

FHA Announces Mortgage Insurance Premium Increase

By Joe Wallace

The Department of Housing and Urban Development and the FHA have announced a plan to increase FHA Mortgage Insurance Premiums. In a press release, HUD No. 12-037, it was announced, “As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration

 

February 14, 2012

FHA Loan Debt To Income Ratios: Do Student Loans Count?

By Joe Wallace

FHA loans require the lender to calculate the borrower’s debt-to-income ratio to determine if the applicant can realistically afford to make a monthly FHA mortgage payment. The borrower’s debts are reviewed and compared to the amount of money coming in–if the ratio is within FHA requirements, the loan can be approved (assuming the borrower meets the other FHA loan criteria). Some borrowers are rightfully concerned about the amount of debt they bring to the bargaining table. Too much debt and the borrower could be denied the FHA home loan. But not all financial obligations are necessarily counted toward the borrower’s debt-to-income calculation. FHA loan rules say some debts, usually with 10 months or less remaining on the payment agreement, do not have to be counted. The lender may choose to | more...

 

February 9, 2012

FHA Loans and Inducements To Purchase

By Joe Wallace

Recently we got a reader question about seller concessions and FHA home loans. Under the rules for an FHA mortgage, the seller is allowed to contribute certain concessions (interest rate buydowns and other contributions) as long as the concessions don’t exceed the FHA’s maximum rate. According to FHA loan rules at the time of this writing, “The seller and/or third party may contribute up to six percent of the lesser of the property

 

February 3, 2012

Reader Question: Can I Get an FHA Debt Consolidation Loan?

By Joe Wallace

A reader asks, “Is it possible to get an FHA loan and consolidate my house and credit card?” According to FHA loan rules, new purchase FHA loan amounts are limited to the statutory loan limit for the area, or “a percentage of the lesser of the appraised value, or sales price.” This would preclude getting cash back on the deal unless the borrower was owed a refund of some kind–FHA loans also require at least a 3.5% minimum down payment. The borrower must provide funds to close the deal. But FHA refinancing loans do feature a cash-out refinancing loan option. FHA rules do technically permit FHA cash-out refinancing for debt consolidation, but advises lenders, “Cash out refinancing for debt consolidation represents considerable risk, especially if the borrowers have not had | more...

 

January 31, 2012

FHA Loans, Effective Income, and Alimony

By Joe Wallace

One important section of the rules for FHA loans states a borrower’s income must be verified by the lender as “effective income”. This means that the income must be stable and likely to continue. Some types of income can’t be counted. A part-time business selling goods on eBay, for example, might not qualify. But what about other types of non-employment income like child support, alimony, or maintenance payments? There are plenty of borrowers who receive or are eligible to start receiving these types of payments. Does the FHA recognize them as effective income? In certain cases, yes. Alimony, maintenance payments as part of a divorce decree, and/or child support can qualify and be counted toward a borrower’s debt-to-income ratio provided the payments meet standards set by they FHA. According to | more...