Articles Tagged With: FHA Loan Requirements

December 22, 2015

HUD 4000.1 On Verifying Military Income

FHA loan rules in HUD 4000.1 specify a variety of requirements for verifying a loan applicant’s income. Military income is one type of earnings brought to the FHA loan process–how is the lender instructed to review this type of employment and verify the earnings? According to HUD 4000.1, the process is similar to other typical types of employment, but thanks to military benefits, allowances, and special pay some additional guidance is required for the lender, starting with a basic definition of the term “military pay”. “Military Income refers to income received by military personnel during their period of active, Reserve, or National Guard service, including: –base pay –Basic Allowance for Housing –clothing allowances –flight or hazard pay –Basic Allowance for Subsistence –proficiency pay” All of those could be used to | more...

December 21, 2015

Mortgage Rate Trends: Creeping Lower

By Joe Wallace

On Friday mortgage rates crept lower, something more than one market watcher has commented on as being a bit contradictory when you think about the idea that the Fed is raising interest rates and that the anticipation of that happening brought a lot of volatility to the markets. Investor reaction to the Fed rate hike announcement was a big “X-factor” last week in terms of which way rates could have gone after that announcement. As we’ve seen, the hike news turned out not to be a big spoiler for mortgage loan interest rates. Rates moved lower but you may notice the changes in the form of lower closing costs instead of actual alterations in the rates. 30-year fixed rate conventional mortgage loans on Friday were still begin reported, best execution, | more...

December 11, 2015

FHA Announces New Loan Limits For 2016

By Joe Wallace

An FHA press release announces 2016 FHA mortgage loan guaranty limits for mortgage loans with FHA loan case numbers assigned on or after January 1, 2016. Housing market changes in 2015 brought increases in the maximum loan guaranty limit in many counties–188 areas will see new, higher limits according to the press release. According to the FHA official site, “Each year, FHA recalculates its loan limits based on 115 % of the median house price in the area. For counties, or equivalent, located in Metropolitan Statistical Areas (MSAs) the limit for all areas in the MSA is calculated based on the highest cost county.” The press release says there has been no alteration to the FHA national loan limit ceiling which, according to the press release, “remains at $625,500”. The | more...

December 10, 2015

FHA Appraisals and Air Conditioning Units

By Joe Wallace

A reader got in touch with us recently to ask whether a home with window-mounted air conditioning units could pass an FHA appraisal. Unfortunately the answer to this question isn’t as simple as a yes or no–there are several factors involved that may determine how an FHA appraiser views such units. The first and most obvious would be the condition of the units themselves. FHA appraisal rules require all mechanical systems in the home to be in good working order or be brought into compliance with that requirement through repair or replacement. The appraiser’s job would be to determine whether or not the general state of the window units–where permitted–is acceptable. But there are a few other unanswered questions–do these window units act as a replacement for a faulty or | more...

December 10, 2015

FHA Loans and Divorce/Separation

By Joe Wallace

We get many questions about how an FHA home loan transaction might be affected by divorce. One of the latest involves a situation where the potential FHA loan applicant wants to apply during a divorce proceeding: “I am currently in the process of legally separating/divorcing my husband. Once granted in court, I plan to apply for an FHA first home buyer loan to find a home for myself and our infant son. From what I am reading online, FHA may still require my husband to do a credit check, etc. However, my question is, if he and I are legally separated in the interim of divorce proceedings and live apart, will his income still be included in the total household limitations? On my own I qualify for both an FHA | more...

December 8, 2015

FHA Home Loans For Existing Properties: Weatherization

By Joe Wallace

Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1: “The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance.” This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1: “Weatherization improvements may be financed in conjunction with the following: –Section 203(b) purchase transaction (or) no cash-out refinance transaction –Section 203(h) Mortgage Insurance for Disaster Victims –Energy Efficient Mortgages (EEM)” The loan rules for this type of FHA mortgage or refinance includes a list of eligible | more...

December 3, 2015

Mortgage Loan Trends: Lower, Then Steady Ahead Of Potential Volatility

By Joe Wallace

On Tuesday there was improvement in mortgage loan rates, with some lenders moving back into sub-four percent territory. That’s a welcome development for those who have been floating in hopes of some kind of improvement; Wednesday didn’t bring more of the same, but rates did hold steady or move only a bit higher in some cases. This is a week for a great deal of potential volatility in rates for a variety of reasons connected to scheduled economic data releases, so locking and floating decisions are tricky–the closer we get to Friday, the greater the potential for higher rates. Friday, the Employment Situation Report comes out and that is a very important event depending on both the contents of that report and investor reaction to it. Some industry pros are | more...

November 30, 2015

FHA Loans After A Deed-In-Lieu Of Foreclosure

By Joe Wallace

A reader question came in recently asking about the possibility of getting an FHA home loan following a deed-in-lieu of foreclosure (DIL) action. “Is a deed-in-lieu derogatory on a credit report?” was one of the questions. The answer to that is that yes, a deed-in-lieu is considered a negative on your credit report. But FHA loans do offer some hope for borrowers who have since the deed-in-lieu established good credit once more. FHA loan rules in HUD 4000.1 cover the requirements in these circumstances for single-family “forward mortgages” after a deed-in-lieu of foreclosure, and those rules include mandatory waiting times or “seasoning periods” following the DIL. When can a borrower apply for a new FHA home loan after a deed-in-lieu? According to HUD 4000.1: “A Borrower is generally not eligible | more...

November 25, 2015

HUD Settlement With Illinois Landlord Over Lead Hazard

By Joe Wallace

The FHA/HUD official site has issued a press release announcing a settlement in a case involving lead hazards in Illinois rental properties. This may seem at first glance to have nothing to do with FHA home loans. But this case is an important reminder of why it is so important to report issues connected with fair housing, hazardous conditions in housing, and related issues–the victims in cases like these are often the only defense against continued violation of federal laws, environmental guidelines, etc. According to HUDNo. 15-151, the Department of Housing and Urban Development, “announced a settlement with a Rockford, Illinois landlord to resolve a claim he failed to inform tenants, some with young children, that their homes may contain potentially dangerous lead.” According to the press release, the agreement | more...

November 25, 2015

Mortgage Loan Interest Rate Trends: Holding Steady After Some Upwards Movement

By Joe Wallace

Monday say mortgage rates moving slightly higher, while on Tuesday rates held steady. There’s some market volatility this week for reasons that include the Thanksgiving holiday–rates may well move into a defensive posture on Wednesday in anticipation of the down day on Thursday. Add to that the uncertainty over a Fed interest rate hike in December and you have a combination of factors that equals a risky time to float, at least in the minds of some industry pros. 30-year fixed rate conventional mortgages are, at the time of this writing, between 4.0% and 4.125% depending on the lender (best execution). The rate changes we’ve seen this week so far may be reflected in closing costs rather than an actual higher interest rate, so borrowers should know that when they | more...