Articles Tagged With: FHA Loan Questions

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

April 26, 2017

FHA Loans For Additional Homes: A Reader Question

Are FHA loans for multiple properties possible? That’s what’s on one reader’s mind recently. “So is there a maximum number of properties one can theoretically have under FHA guidelines?” “Say for example a person owns a home in one city with an FHA mortgage and then has to relocate to another city for job reasons. While in this city there family size increases by several individuals via marriage and or kids. Would that person be able to get a 3rd FHA? mortgage.” This reader question about FHA loans is in response to a blog post we did recently about the issue of applying for another FHA mortgage while currently paying on an existing FHA home loan. The gist of that post is that while FHA loan rules do not generally | more...

April 26, 2017

FHA Reverse Mortgages: An Appraisal Question

By Joe Wallace

A reader asked us a question in the comments section recently about FHA reverse mortgages and the appraisal process for them. “We have a detached garage with a 500 square foot “mother-in-law unit” on top. Will this structure be included in the appraisal in which the reverse mortgage is based on?” FHA loan rules for appraisals are found in HUD 4000.1. Before quoting the rules for appraising what the FHA loan rule book classifies as an “accessory dwelling unit” or ADU, it’s important to remember that state law, and certain building code requirements may also apply. FHA appraisals include determining whether an outbuilding is an ADU or not. The FHA definition of an ADU is as follows: “An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, | more...

April 24, 2017

FHA Loans and Alimony/Child Support

By Joe Wallace

A reader asked a question in our comments section about FHA loan rules for alimony and child support payments: “What is a voluntary payment agreement? I am divorced its a closed case and I actually pay a little more than what we agreed to in the official settlement agreement. Shes now trying to buy a house and will be dealing with the whole proving amount of alimony/child support and its very difficult to amend a closed case.” “If we have an agreement between ourselves for (x) dollars/month for (x) amount of time and have this notarized, would this constitute a voluntary payment agreement?” The reader is referencing an earlier blog post from 2013, which includes the following about how the lender may consider alimony and child support as part of | more...

April 18, 2017

FHA Loans And The 100 Mile Rule: A Reader Question

By Bruce Reichstein

A reader asked us a question about FHA loans and “the 100 mile rule”. “I am currently looking to purchase a home with FHA financing 5 miles from my current home in California. The current home I own is secured with a conventional loan. I would like to rent this home out and buy a larger home and finance it FHA because I dont have very much saved up for a larger down payment. Does the 100 mile rule apply to me?” The reader is asking in response to a post we made earlier this year about military FHA borrowers and occupancy rules for FHA loans. This quote from that original post, referencing FHA loan rules in HUD 4000.1, seems to be the issue of most concern for the reader: | more...

April 17, 2017

FICO Scores And FHA Loan Approval

By Joe Wallace

How do FICO scores affect your FHA home loan application? A reader got in touch this week to ask a question in this area: “Hello, my credit score is between high 500s, low 600s. I make $8,000 a month. My mother in law said she would co-sign for my wife and I, her score is near perfect. Is this situation possible to get a loan for a home? She manages an apartment complex and pays no rent. Thanks for your time.” FHA loan rules in HUD 4000.1 state that a borrower is technically qualified for maximum financing (with a required minimum 3.5% down payment) with FICO scores at 580 or higher. Borrowers with FICO scores between 500 and 579 are technically eligible for FHA loans with a 10% minimum required | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 14, 2017

Identity of Interest Issues And FHA Loans

By Joe Wallace

A reader got in touch to ask about FHA loans and identity of interest rules this week. “I have a loan that I am working on right now and the underwriter is saying that we have an “identity of interest” issue.” “The situation is this my borrower is not related to the seller but has been renting the house she is buying for five months. Because there is no family relationship between the seller & buyer, does she has to live in the house for six months?” The FHA loan rule book, HUD 4000.1, describes identity of interest transactions as a house sale “between parties with an existing Business Relationship or between Family Members.” The word “interest” in this case refers not to interest rates, but rather to the interest | more...

April 12, 2017

FICO Scores and FHA Loans: A Reader Question

By Joe Wallace

Can a co-borrower make up for another borrower’s FICO score issues? A reader asked us a question along those lines in our comments section recently: “My credit is not good enough to get a home loan. However, if my sister was willing to cosign for me to get a home can she sign? What are the requirements” FHA loan rules require all borrowers to be obligated on the mortgage to credit qualify. We get a glimpse at FHA loan policy in HUD 4000.1 page 132 which discusses “Minimum Decision Credit Scores” for all borrowers: “The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrowers credit report when all reported scores are the same. Where three differing scores are reported, the middle score is the MDCS. | more...

Can I get an FHA home loan if I owe back taxes?

March 30, 2017

Hazard Insurance For FHA Loans

By Joe Wallace

A reader got in touch recently with a question about hazard insurance and FHA mortgages. “We’re fixing to close on a home and they’re telling us that we have to have a shed that is on the lot covered with flood insurance. Is this correct and how much coverage do you have to have on a shed if you’re in a flood zone?” We get a large number of “Is this correct?” type questions. Some ask because they don’t realize that FHA loan rules aren’t the only ones that must be followed in a mortgage loan transaction. If the requirement is made by the lender, that lender’s standards would apply as long as the standards are in accordance with FHA loan guidelines, state law, and federal law. So the “Is | more...

March 29, 2017

Cosigners and Co-Borrowers On FHA Loans

By Joe Wallace

In our previous blog post we discussed an FHA loan reader question about co-borrowers and their status. What is the basic difference between a cosigner and a co-borrower and how does an FHA loan work in such cases? FHA loan rules in HUD 4000.1 differentiate between a cosigner and co-borrower; the cosigner, while liable for the loan, does not have any ownership in the property. The co-borrower has both financial responsibility and ownership. Both cosigners and co-borrowers must have a legal primary residence in the United States or be U.S. citizens. Borrowers, co-borrowers, and cosigners all must provide basic information to the lender including Social Security numbers. Co-borrowers and cosigners are subject to the rules of HUD 4000.1 that restrict who can participate in an FHA loan transaction: “A party | more...

March 29, 2017

FHA Loans With A Non-Occupying Co-Borrower

By Bruce Reichstein

How does having a non-occupying co-borrower affect your FHA mortgage? What happens if one of the borrowers decides they want a change in their status as occupying or non-occupying? A reader asked us a question along these lines recently in the comments section: “I just purchased my home in November 2016 with my husband’s uncle as a co-borrower (not living in the property). Now he is getting a divorce and his soon-to-be ex-wife wants the househe basically just helped me qualify of put the down payment to purchase and pay the mortgage on my ownhe even signed hes rights to the title the day we signed for the property is I was told. I could put in that paper after about 6 months of having the property but now I | more...