Articles Tagged With: FHA Loan Questions

August 23, 2016

FHA Loan Question: Shared Wells

A reader asks, “Theres a well shared by seven houses producing six gallons per minute for all seven houses. The well went dry and now we were told we have till December to Feb before it goes dry. Will the loan agencies finance homes at the tail end of a wells life?” We won’t presume to speak for financial agencies or their requirements, as standards may vary from lender to lender. However, we can reference FHA home loan rules to see what is permitted. FHA loan approval depends on a variety of factors, not just a borrower’s credit report or other issues. One factor is the condition of the property itself, which is determined by an FHA appraisal. The purpose of an FHA appraisal is to insure properties to be | more...

August 18, 2016

FHA Loans and 401K Income

By Joe Wallace

A reader got in touch with us recently in the comments section to ask a question about 401K retirement income as it relates to FHA loan approval. “Does the fact that you have a 401k count as income or does it benefit your chances in any way of getting a home loan?” FHA loan rules in HUD 4000.1 cover a variety of income sources including 401k income. Individual retirement account income from a 401K may be used to qualify a borrower for an FHA mortgage provided the income meets FHA and lender standards. HUD 4000.1 instructs the lender on how to review 401K income, beginning with a definition of it: “Individual Retirement Account (IRA)/401(k) Income refers to income received from an IRA.” With the definition spelled out, the FHA loan | more...

August 17, 2016

FHA Loan Questions: Income Rules

By Joe Wallace

A reader got in touch with us to ask a question about FHA standards for income. “I am on contract and my lender just told me that I might not be qualify for FHA because of my income. Is that one of the requirements for FHA?” FHA loans require the borrower to financially qualify for the loan, which includes the lender making a determination about the borrower’s employment situation. While this reader question is far too general to answer with regards to the reader’s specific circumstances, we can observe the following about FHA home loans based on a reading of HUD 4000.1: The lender is required to verify a borrower’s income to insure it is stable, reliable, and likely to continue. Income that is deemed “verifiable” is allowed to be | more...

August 16, 2016

FHA Loans and Social Security Income: A Reader Question

By Joe Wallace

A reader asks, “I am halfway though a 15 year mortgage on a 2009 manufactured home. I am disabled, collecting SSD and my wife works as a school teacher.Would I qualify to refinance my home?” FHA loans and refinance loans have rules that do permit the use of Social Security income to qualify for a loan, provided the income meets certain requirements. The lender is required to determine that the income is likely to continue. HUD 4000.1 has guidelines and instructions to the loan officer that include the following about Social Security and other disability benefits: “Disability Benefits are benefits received from the Social Security Administration (SSA), Department of Veterans Affairs (VA), other public agencies, or a private disability insurance provider. The Mortgagee must verify and document the Borrowers receipt | more...

August 10, 2016

FHA Loan Questions: Appraisal Issues

By Joe Wallace

A reader asks, “We just purchased our first home using an FHA loan. After 2 months in the house we had a typical Arizona monsoon storm come through. Our home flooded due to poor drainage on 3 sides of the house. The grading slopes towards the structure and not away. There are no gutters on the home nor a drainage system to move the pooling water away from our home. What recourse do we have when the FHA approved appraiser reported that there are no problems with the grading and drainage? Our home is damaged and our insurance does not cover flood damages.” The FHA official site is clear on the subject of FHA appraisals in that the appraisal process is not meant to be a home inspection. The appraisal | more...

August 3, 2016

FHA Loan Questions: Divorce, Refinancing

By Joe Wallace

A reader asks, “My husband is a co-borrower on a 2nd mortgage or loan with his ex-wife. In the divorce decree, it stated that she was to have the loan refinanced so his name would no longer be on the loan. Its almost been a year, and she has been late several times.” Three weeks ago she moved out of county and allowed their ex-daughter-in-law to move it and make the payments. What steps should my husband take at this time?” FHA loan rules in HUD 4000.1 don’t specifically factor into a question like this, except where specific requirements of the new loan are concerned. The real issues here are legal ones, and for that, the reader will need to discuss the situation with a lawyer with expertise in divorce | more...

July 29, 2016

FHA Loan Questions: Appraisal Concerns

By Joe Wallace

A reader asks, “I am about to put my house on the market. But now I’m starting to worry about a crack on the basement floor that has been there since I bought the house, I never worried about the crack, its due to the house settling to one side years ago. Other than that the house is structurally sound and basement is very dry. I think the house dips about 3/4 inch. Is this something that would cause an inspection to fail?” There are several issues that can make questions like these difficult to answer. The first is to remind borrowers and sellers alike that an FHA appraisal is NOT an inspection, nor does passing the FHA appraisal process equal an FHA stamp of approval on a property that | more...

July 26, 2016

FHA Loan Questions: Unpaid Tax Liens

By Joe Wallace

A reader asks, “I entered into an electronic direct withdrawal from my checking account repayment plan with with IRS for tax underpayment…after meeting with IRS, payment agreement request was approved. After the agreement was approved IRS filed a lien on the owed amount. I am not currently not a property owner, but I would like to buy a home in the next year.” “However the tax lien caused my credit score to drop to 649. I currently earn $92,000.00 from retirement income, and $40,000.00 from employment income. debt ration is where it should be. My question is can I ever qualify for FHA home loan, if the lien is not paid? Or (does) the lien (have) to be paid in full, along with a paid document submitted to all credit | more...

July 14, 2016

FHA Loan Questions: Refinancing After Foreclosure

By Joe Wallace

A reader asked us recently, “Is it true that I have to wait to refinance my FHA mortgage after having had a foreclosure on another property I own?” FHA loan rules regarding new loans in the wake of a foreclosure are found in HUD 4000.1, page 247 which states: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number assignment. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the foreclosing Entity/designee.” FHA loan rules do provide certain exceptions. “The Mortgagee may grant an exception to the three-year requirement if the foreclosure was the | more...

July 5, 2016

FHA Loan Questions: No Money Down Loans

By Joe Wallace

A reader got in touch with us recently to ask about an important aspect of FHA mortgage loans-the down payment. “I would be a first time buyer, 3 years full time work history, only car payment bill which is paid on time with auto pay from bank. looking for a single home, I am single with credit score of 797. However I have no down payment…would I qualify for an FHA loan?” HUD 4000.1 addresses the rules and regulations for FHA home loans and refinance loans. It includes, on page 155, a definition of what the FHA considers a down payment (the “minimum required investment”) and the “Total Required Investment” needed from the borrower. From HUD 4000.1: “Total Required Investment refers to the amount the Borrower must contribute to the | more...