Articles Tagged With: FHA Loan Questions

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

August 1, 2014

Types of FHA Home Loans

There are a wide variety of options when it comes to the FHA loan program. Did you know you can buy or refinance a home using an FHA mortgage? You don’t have to have an existing FHA mortgage in order to refinance into an FHA mortgage, and for qualifying borrowers aged 62 or older the Home Equity Conversion Mortgage loan offered under the FHA loan program can also be an option. For new purchase FHA home loans, borrowers have the option under the FHA single-family loan program to purchase a suburban home, a townhome, condo, duplex or other home classified as real property (no houseboats or motor homes). FHA loans for new purchases require a minimum 3.5% down payment. This is non-negotiable, though borrowers are free to make a larger | more...

July 21, 2014

FHA Loan Rules For Credit, Short Sales, Foreclosures: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are looking to potentially buy a manufactured home already on some land. The home itself appears to meet the requirements stated above. The mortgage loan officer is stating that we do not qualify for a loan for a manufactured home due to my husband having a foreclosure seven years ago and I have a short sale three years ago. Is this correct, that due to our prior home financing circumstances, we are ineligible for an FHA loan for a manufactured home?” The important thing to keep in mind with regard to questions like this is that FHA loan rules aren’t the only ones that govern the FHA loan transaction–lender standards also play a part. FHA loan requirements for credit and other financial qualifications | more...

June 27, 2014

FHA Appraisals and Required Corrections: A Reader Question

By Joe Wallace

A reader asks about a refinance loan situation where “an appraisal is done there’s a recommendation of installing an electric line water heater and roof sealing, can the loan be approved without doing these improvements or can the cost be added to the mortgage loan to do so?” If the FHA appraiser recommends corrections or alterations, these are usually done as a condition of loan approval and may require a compliance inspection to insure they have been accomplished. However, the second part of this reader question does offer the borrower some possibilities when the borrower is required to pay for the fixes. According to the FHA loan rules published in HUD 4155.1 Chapter Two, Section A, under the heading titled, “Adding Repair and Improvement Costs to the Sales Price” we | more...

May 23, 2014

FHA Loan Requirements For Occupancy: What The Rulebook Says

By Joe Wallace

When you want to purchase a home using a single-family FHA home loan, you should know what the FHA loan program’s requirements are for occupancy of the property. Did you know you are required as a borrower to certify you’ll use the home as your personal residence? FHA loan rules in HUD 4155.1 explain these rules and how they apply to the borrower. There are many questions about occupancy including whether or not a borrower can purchase a single family home and rent out individual rooms, or whether a multi-unit property can be obtained and rented out. Essentially, the FHA single-family home loan program rules state the following: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property | more...

May 20, 2014

FHA Loan Reader Questions: Down Payments

By Joe Wallace

A reader asks, “Is there any assistance I can get in order to buy a house without a down payment or very little with mortgage payments…?” In most cases the kind of assistance the reader is looking for would likely come from a state or local program, organization, or charity group. When it comes to the FHA loan program itself, the rules governing down payments are found in HUD 4155.1 Chapter Five, Section B, titled “Acceptable Sources of Borrower Funds.” In this section, we find the following instructions to the lender: “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price.” Chapter Five also adds that | more...

May 19, 2014

FHA Loan Reader Questions: Student Loans and the Debt-To-Income Ratio

By Joe Wallace

A reader asks, “I am trying to purchase a property through the first time home buyer’s program. I have student loans that are in deferment for two years because that is the time I will be graduating and my school provided a letter confirming this to the loan officer.” “The loans has been deferred before i submitted my loan documents so therefore, one deferment will be end in October, 2014 and the other December, 2014 but they will be placed in deferment again for another year until I end school. The closing of this property is June, 2014. Will this pose a problem or can the sworn letter from the school be used.” The reason this question is important in the FHA home loan process is because when your loan | more...

May 12, 2014

FHA Refinance Loans With No Cash Out

By Joe Wallace

There are several FHA refinance loan options. One is FHA Streamline Refinancing, which has no FHA-required credit check or appraisal (though your lender may require one of both). Another is the FHA Cash-Out refinance loan option, where a borrower can take cash back on the loan once the original loan is paid in full. The cash back on such loans can be used for any purpose acceptable under the terms of the new loan agreement. But there’s another refinance loan option available similar to cash-out in that a credit check is required, but without cash back. The no-cash-out FHA refinance loan has rules covered in HUD 4155.1, including maximum loan amounts and what can be added to the new loan amount. FHA loan rules also cover what kinds of liens | more...

May 8, 2014

FHA Loans Where The Seller Is A Family Member: A Reader Question

By Joe Wallace

A reader asks, “What is defined as a family member? My partner and I were told by our underwriter that we can only get a loan for 85% of the house’s value. The person we are purchasing from is a fourth cousin of my partner who wouldn’t be on the mortgage.” “The house’s appraisal value is significantly lower than expected. It’s replacement value is over 250k, but due to a glut of houses on the market and a lack of comparable in the area it was appraised at under 75k. It was appraised just higher than what the purchase price would be. Our loan officer has questioned the underwriter about this and they said family is family. Is there a definition of family put out by the FHA?” The sale | more...

April 24, 2014

FHA Loan Rules: Seller Paid Closing Costs

By Joe Wallace

The FHA loan rulebook, HUD 4155.1, has rules about how much a seller or other third party can contribute to the closing costs of a borrower purchasing a property using an FHA mortgage. According to the rules, it is possible for a seller to contribute toward closing costs, but there are limits. “The seller and/or third party may contribute up to six percent of the lesser of the property’s sales price or the appraised value toward the buyer’s closing costs, prepaid expenses, discount points and other financing concessions.” Six percent of the sales price or appraised value (whichever amount is lower) also includes the following: third party payment for permanent and temporary interest rate buydowns, and other payment supplements payments of mortgage interest for fixed rate mortgages mortgage payment protection | more...

April 22, 2014

FHA Loan Appraisals–When Do They Expire?

By Joe Wallace

One common question about FHA loans involves the length of time an appraisal is valid. How much time before a current appraisal expires on the property you want to purchase with an FHA mortgage loan? According to FHA loan rules, “The validity period for all appraisals on existing, proposed and under construction properties is 120 days.” That is found in HUD 4155.2 Chapter Four, which also adds some instructions to the lender about when the appraisal is considered valid–the actual starting date for the validity period: “The term of the appraisal begins on the day the home is inspected by the FHA-approved appraiser and this date appears on the URAR.” The existence of these rules begs an important question. Can an FHA borrower refinance with an “appraisal required” FHA refinancing | more...