Articles Tagged With: FHA Loan Limits

January 24, 2012

FHA Loan Rules: Proposed Seller Concession Changes

When a house hunter wants to buy a home with an FHA insured mortgage, he or she may find a seller willing to offer incentives–known as seller concessions–to make the deal more attractive. Seller concessions can include interest rate buydowns, discount points or other contributions that are related to closing costs. At the time of this writing, FHA loan rules state that these concessions can total no more than six percent of the sales price. Any more than six percent is considered an inducement to purchase the property and the FHA requires an adjustment in the loan amount. According to the FHA official site, “Each dollar exceeding FHA

January 19, 2012

FHA Loan Reader Question: FHA Loans and Credit History

By Joe Wallace

Sometimes, shopping around for a participating FHA lender is a bit more complex that you might think. There are basic issues related to competitive interest rates, getting the most favorable terms, even the simple chemistry between the borrower and the bank can be an issue. But what about situations where the borrower feels the lender hasn’t quite done right in terms of customer service? One reader left this comment; “I owned my home for 12 years (FHA loan) and sold it December 2010. I am now told that I have NO CREDIT SCORE!!! I paid cash for car and have no credit cards. I

January 17, 2012

FHA Loan Reader Question: Do I Qualify For an FHA Mortgage?

By Joe Wallace

FHA loans have minimum credit standards which include requirements for timely bill paying, dependable work history and other factors that can affect an FHA mortgage application. But FHA rules are designed to be flexible depending on a borrower’s circumstances. In general the FHA rules tend to be more forgiving when borrowers can show that financial difficulties were beyond the borrower’s control and have been resolved successfully. With that in mind, we turn to a recent question from one of our readers: “I am looking to buy, my current residence from a family member.

January 11, 2012

FHA Loan Limits: Family Member Purchases

By Joe Wallace

Recently we posted about FHA loan limits and something called “identity of interest” transactions, which the FHA official site describes as “a sale between parties with family or business relationships.” For example, if a business partner wanted to sell property to a fellow partner, that could constitute an “identity of interest” transaction. The same would be true of family members selling to other family members. According to FHA loan rules, the “maximum loan-to-value (LTV) factor for identity-of-interest transactions on principal residences is restricted to 85%.” That means the borrower would be approved for the FHA home loan, but only for 85% of the value of the property. Fortunately for many borrowers, the FHA has exceptions to this 85% rule. “Financing above the 85% maximum for identity-of-interest transactions is permitted under | more...

January 10, 2012

FHA Loans and Your Verifiable Income

By Joe Wallace

Filling out the FHA loan application is the first official step on the road to an FHA guaranteed mortgage. All the preparation a borrower should be doing prior to the loan application including the review of your own personal credit data, making a budget, closing unneeded lines of credit, and other steps are just the preliminaries. The application is what sets you on the path to home ownership. But what does your lender do with the application data once you’ve handed it over? FHA loans are issued by private banks and mortgage companies, not the government. Participating FHA lenders must insure the credit they issue is not a risky investment, and the details on your credit application are not just reviewed, they are also verified to make sure they give | more...

December 19, 2011

FHA Refinancing Loan Requirements

By Joe Wallace

One recurring question in the reader comments section as of late involves the rules of cash-out refinancing loans and streamline refinancing loans insured by the FHA. Some borrowers seek loans on property that no longer has a mortgage, and wonder if FHA refinancing loans can help. Borrowers looking at options including FHA cash-out refinancing or streamline refinancing learn there are important differences between the two. FHA streamline loans require the home to have a lien, otherwise there is no loan to refinance. Without an existing mortgage, there’s no possibility an FHA streamline loan can be underwritten for that property. For example, in the HUD.gov frequently asked questions section, under the heading, “Streamline Your FHA Mortgage”, the site states; “FHA has permitted streamline refinances on insured mortgages since the early 1980’s. | more...

December 14, 2011

FHA Energy Efficient Mortgages

By Joe Wallace

Borrowers new to the FHA insured loan program should know about the FHA loan option called an Energy-Efficient Mortgage or EEM. An FHA EEM is intended to add a set amount to the FHA home loan in order to finance upgrades or improvements to the home that result in a more energy efficient property, which saves money over the long term. According to FHA loan rules, eligible properties for an EEM loan include, “New and existing one to four unit properties, including one unit condominiums and manufactured housing properties”. EEM loans are for new purchase transactions or refinancing, including the FHA 203(k) Rehabilitation Loan, FHA 203(h) loans for victims of natural disasters and standard FHA 203(b) loans. Borrowers who are purchasing multi-unit property should know an FHA EEM is calculated | more...

December 13, 2011

FHA and HUD Information In Spanish

By Joe Wallace

The FHA and HUD offer a wide range of information, advice, and news about FHA insured home loan programs. Part of that information includes FHA/HUD resources in Spanish. Did you know there’s an entire Spanish-language site dedicated to the same information provided in English? The Spanish language version of these pages is available at http://espanol.hud.gov/home.html and features information about buying vs. renting, home economics, FHA loan advice and other valuable resources. For those who have already purchased homes with an FHA mortgage, there are resources including topics on FHA/HUD refunds and “refund tracers,” refinancing options, foreclosure avoidance and other important details. When it comes to foreclosure avoidance advice, borrowers in trouble on their FHA loans in need of Spanish-language resources should see the page titled, “Gu

December 8, 2011

FHA Loan Foreclosure Avoidance Options

By Joe Wallace

According to HUD.gov, there are a variety of options for borrowers to consider when trying to avoid FHA loan default or foreclosure. The options are not guaranteed for all borrowers–you may be required to qualify for each program depending on your circumstances, whether or not you are current on the FHA home loan and other factors. It’s very important to consider these options before you have missed any payments or are in ongoing financial trouble on the loan–doing so keeps you eligible for the most advantageous terms and options. FHA Borrowers who want to modify or refinance their loans for lower payments should consider one or more of the following options: Home Affordable Modification Program: This program, also known as HAMP, lowers the borrower’s monthly mortgage payment to 31 percent | more...

December 7, 2011

What is an FHA 203(n) Mortgage Loan?

By Joe Wallace

As we’ve written in other blog posts, the most well-known FHA home loan is called the FHA 203(b). This is the mortgage loan product most FHA borrowers who are first time house hunters will apply for to purchase a home. But there are many other types of FHA home loans, including something known as the FHA 203(n). This is also known as a Single Family Cooperative Mortgage and according to the FHA, is designed to insure loans “for persons buying a unit in a cooperative housing project. The loan is made by a lending institution, such as a mortgage company, bank, or savings and loan association, and is insured by HUD’s Federal Housing Administration (FHA).” As with other FHA loans, the purpose of the FHA 203(n) Single Family Cooperative Mortgage | more...