Articles Tagged With: FHA Loan Questions

January 12, 2016

FHA Refinance Loans And FICO Scores

Are you considering an FHA refinance loan? Are you concerned about your credit scores, or whether and new loan will require a credit check? There are some important issues to keep in mind about FHA refinancing that can help you in the planning stages of your new loan application. First, not all FHA refinance loans have an FHA-required credit check. FHA Streamline refinance loans (for existing FHA home loans only) have no FHA requirements for a new credit check though your lender may require one anyway. That is permitted under the rules for FHA refinances. FHA Streamline refinance loans are intended for owner-occupied homes that were originally purchased with an FHA mortgage. However, the borrower does not have to stay with the original lender that issued the loan. You are | more...

January 6, 2016

HUD 4000.1 On Self Employment Income For FHA Home Loans

By Joe Wallace

HUD 4000.1 has rules that govern the procedures a participating FHA lender must use to verify the income of a self employed borrower or owner of a family business. The fact that an FHA mortgage loan applicant is self-employed is not a barrier to loan approval, but there are different requirements for those who own a family business or who are considered self employed. HUD 4000.1 has instructions for the lender in these cases, beginning with a definition of who is affected by these rules: “Self-Employment Income refers to income generated by a business in which the Borrower has a 25 percent or greater ownership interest. There are four basic types of business structures. They include: –sole proprietorships; –corporations; –limited liability or S corporations; and –partnerships.” How does a lender | more...

January 4, 2016

FHA Home Loans, Domestic Partnerships, And Identity Of Interest Transactions

By Joe Wallace

Recently a reader got in touch with us in the comments section to ask the following question about FHA loans, identity-of-interest transactions, and whether a domestic partnership could require additional consideration for assuming an FHA loan or applying to buy a home from a domestic partner: “I have lived in a residence with my boyfriend for the last 3 years. He currently owns the property and is going to be moving. I would like to stay in the residence and purchase his home from him. I have resided here rent free (on paper anyway no lease agreement). He has paid his mortgage, while I have paid all of the other household expenses (utilities, groceries, etc). Question #1: Am I considered a tenant of the property even though there is no | more...

What you should know about FHA 203(h) Loans For Disaster Victims

December 22, 2015

FHA Loans, Credit Issues, And Down Payment Assistance Programs

By Joe Wallace

A reader got in touch recently to ask about FHA loan credit requirements and down payment assistance programs. That question includes the following: “…My (FICO) score was about 500 for years till I finally am working with the Lexington Law Firm that I’m paying $99 a month that I have 3 negatives I still am owing but I see that now I have my score went up to 648 which is fair but I want to know about the loan.” “Will FHA approves me to get a loan to buy a house in PA. But I’m not quite sure about AmeriDream that if I still can apply to make a down payment for the house?” FHA home loan approval depends on a variety of factors, of which FICO scores are | more...

December 21, 2015

FHA Loans, First Time Home Buyers, and Job History

By Joe Wallace

We get plenty of questions about FHA home loan rules about income, employment, and issues related to being a first time home buyer. Here’s one that came in recently: “I purchased a condo in February 2012, and it was sold three years later,due to financial hardship. I started a new job November 30, 2015 in the same profession as my previous employment history as a customer service representative. Do I qualify as a first time homebuyer to apply for a FHA loan? Would I be required to be employed for at least six months on my new job?” FHA loan rules focus on the borrower’s overall employment history. Here’s what’s written in HUD 4000.1: “For all Employment related Income, the Mortgagee must verify the Borrowers most recent two years of | more...

December 4, 2015

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader got in touch with a question in the comments section about FHA loan FICO score requirements, asking, “I have a client that was denied by my lender but has an approval by another. My situation is this.parents are putting $200k down for the purchase. The boys will be qualifying for the $150k balance. Mid FICOS are 600 and 602 and one son has two lates within the last 6 months. My lender said that with a score below 640, they fall into a different category that prohibits any lates in the past 12 months. Can you please clarify?” Lender standards vary from one financial institution to another, so it’s entirely possible what the reader is asking about here is a specific lender’s standard. In general it’s strongly discouraged | more...

October 23, 2015

FHA Loan Income Verification Rules: Seasonal Employment

By Joe Wallace

We’ve been examining FHA loan rules for income verification including requirements for full-time and part-time employment. But some FHA loan applicants have unique jobs that keep them employed on a seasonal basis. Does the FHA loan rulebook, HUD 4000.1, have provisions for these types of soon-to-be homeowners, too? According to the rules, participating FHA lenders may verify seasonal employment if it meets certain FHA standards. HUD 4000.1, Section II Part A includes the following, starting with a definition of “seasonal employment” as acceptable to the FHA: “Seasonal Employment refers to employment that is not year round, regardless of the number of hours per week the Borrower works on the job.” The FHA instructs the lender, “The Mortgagee may consider Employment Income from Seasonal Employment as Effective Income if the Borrower | more...

October 14, 2015

FHA Loan Mortgage Insurance Termination

By Joe Wallace

One commonly asked questions about FHA home loans involves when a borrower is permitted to terminate FHA-mandated mortgage insurance. There is a difference between FHA mortgage insurance premiums and private mortgage insurance–borrowers with questions about private mortgage insurance will need to contact the insurance provider. But for FHA mortgage insurance, there are rules in HUD 4000.1 that govern when such the coverage may be cancelled. These rules are found in Section III Part A, which includes the following: “A Mortgage Insurance Termination is the ending of FHA Single Family mortgage insurance at which time the Mortgagees obligation to remit MIP to HUD ends. Upon termination, the Borrower and Mortgagee will enjoy only those rights, if any, to which they would be entitled under the National Housing Act if the insurance | more...

October 13, 2015

FHA Loan Credit Questions: Delinquent Rent Payments

By Joe Wallace

A reader asked us a question in the comments section recently about FHA loan applications and missed payments. “I have let family members rent 2 apartments in my name and they left them early which left me with the bill–will that keep me from qualifying for a FHA loan?” The answer to this question depends on several things. Was this simply a case of breaking a lease? If so, was the rent paid on time before the lease was broken? If there are late or missing payments, that could be an issue depending on circumstances, the lender, and whether the payment issue was ever resolved. Any debt in the borrower’s name would be examined by the lender, even if it was to help out another family member. Co-signing is also | more...

October 7, 2015

FHA Loan Appraisal Rules: “Second Appraisal” Requests

By Joe Wallace

We get lots of questions about the FHA appraisal process in the comments section. Here is one of the most recent, which raises an important question about “replacement appraisals” or any request for a new appraisal that has to do with a dispute over valuation of the property. The reader asks, “I have a buyer who is buying a home. The home they are buying already had an appraisal completed. That deal fell through and my buyers offer was accepted. The sellers agent said that the original appraisal came in short and asked that we order a new one.” “He said his seller insists on a new appraisal because the original one done a few week before was less that the purchase price. Is is possible to request a new | more...