Articles Tagged With: FHA Loan Requirements

Can I buy a manufactured home with an FHA loan?

November 24, 2015

Get Ready For Your FHA Cash Out Refinance Loan

When you buy a home with a conventional, FHA, or other type of home loan product, one day you may wish to refinance to take advantage of the equity you’ve built up in the home. An FHA cash-out refinance loan can help you do that. With a little planning you can make the most of your refinance experience. The first step is to figure out how much time you need to prepare for the loan. There are closing costs, and a new credit application and appraisal will be required. Saving money for the appraisal is a good idea, and if you wish to purchase discount points on your cash out loan you can pay for them up front with reduced stress on your monthly budget if you take enough time | more...

November 23, 2015

FHA Loan Minimum Property Requirements in HUD 4000.1: Water Supply, Wells

By Joe Wallace

FHA loan rules covering minimum property requirements (for all homes to be purchased with a single-family FHA loan) are found in HUD 4000.1. The topic of water supply to the home is one that frequently comes up when borrowers or soon-to-be FHA loan applicants look at homes that are serviced by wells or other “alternative” types of water supply other than a public utility. What do FHA loan rules have to say about the water supply to the home? HUD 4000.1 begins by stating: “The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning | more...

November 19, 2015

FHA Loan Appraisal Standards: Environmental Concerns

By Joe Wallace

We’ve been reviewing appraisal standards and minimum property requirements as listed in the new HUD single family FHA loan rulebook, HUD 4000.1. One important section concerns environmental standards for any home purchased with an FHA mortgage. In general the lender is responsible for insuring that homes purchased with FHA loans are, “free of all known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Propertys ability to serve as collateral, and the structural soundness of the improvements.” The lender cannot approve homes for FHA mortgages, for example, when power lines cross over certain water-based features of the home such as swimming pools. The existence of high pressure gas pipelines may also be a problem depending on the nature and location of | more...

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

November 18, 2015

FHA Appraisal Rules In HUD 4000.1: The Living Unit, Structural Conditions

By Joe Wallace

The FHA loan rules for minimum property standards in HUD 4000.1 include a section describing general requirements for “the living unit”. These instructions would be considered by the appraiser in addition to, but in replacement of, state and/or local building code. According to HUD 4000.1, “The Mortgagee must confirm that each living unit contains: –a continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for all household uses; –sanitary facilities and a safe method of sewage disposal. Every living unit must have at least one bathroom, which must include, at a minimum, a water closet, lavatory, and a bathtub or shower; –adequate space for healthful and comfortable living conditions; heating adequate for healthful and comfortable living conditions; –domestic hot water; and –electricity adequate | more...

November 17, 2015

FHA Loan Minimum Property Standards In HUD 4000.1

By Joe Wallace

The FHA home loan rules published in HUD 4000.1 include a set of minimum property standards that a home purchased with an FHA mortgage must live up to. The FHA appraisal is the process used to determine whether a property meets these minimum standards, also known as MPRs (Minimum Property Requirements) and MPS (Minimum Property Standards). According the HUD 4000.1: “As the on-site representative for the Mortgagee, the Appraiser provides preliminary verification that a Property meets the Property Acceptability Criteria, which includes HUDs Minimum Property Requirements (MPR) and Minimum Property Standards (MPS). Minimum Property Requirements refer to general requirements that all homes insured by FHA be safe, sound, and secure.” HUD 4000.1 defines MPS as, “regulatory requirements relating to the safety, soundness and security of New Construction. When examination of | more...

November 16, 2015

Mortgage Loan Interest Rate Trends: Cautiously Improving

By Joe Wallace

For six days in a row, mortgage rates pushed higher. Then, for three days last week rates either leveled off or tried to improve. We’ve seen a general upward trend since Fed statements about a possible interest rate hike; the trends seems to be upwards for now in anticipation of the December Fed announcement that could reveal more about that possible rate hike. And in the meantime, breaking economic news or world events could also come together to influence rates depending on the nature of those headlines or events. It’s not just domestic economic news at work as an influencing factor on mortgage loan rates. All the talk of the Fed raising rates has markets and investors reacting in ways that put upward pressure on mortgage rates in general. 30-year | more...

November 13, 2015

FHA Home Loan Income Rules: Disability Income

By Joe Wallace

FHA loan rules in HUD 4000.1 have requirements for the lender to follow when it comes time to verify income. One type of income the lender may need to verify is disability income from SSI, the VA, or private disability benefits. HUD 4000.1 has this to say about this type of income, starting with a basic definition of terms: “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 of benefits from the SSA, VA, or private disability insurance provider. The Mortgagee must obtain documentation that establishes award benefits to the Borrower.” The timing of such benefits is crucial, as HUD 4000.1 adds, “If any disability | more...

November 12, 2015

HUD 4000.1 On Lead Paint Disclosures

By Joe Wallace

Since the FHA and HUD published the new single family home loan rulebook, HUD 4000.1 earlier in 2015, we have been examining important aspects of that rulebook. The FHA changed/updated some portions of the rules, added other portions to existing regulations, and issued a message that lenders were expected to become familiar with HUD 4000.1 as a whole, rather than try to explain each and every instance of changed or modified policy in the new publication. So we’ve been tackling some of these relevant issues, discussing them individually as they appear in HUD 4000.1. One such issue has to do with lead paint disclosure requirements. HUD 4000.1 states, “If the Property was built before 1978, the seller must disclose any information known about lead-based paint and lead-based paint hazards before | more...

November 6, 2015

FHA Loan Rules For Alimony, Debt-To-Income Calculations

By Joe Wallace

A reader got in touch with us with a question about how FHA loan rules view alimony payments as part of the debt to income ratio calculation. “I pay a certain monthly amount of alimony to my ex-spouse, in addition to usual monthly credit card payments, and utilities, food, etc. I receive considerable income tax reductions due to making the alimony payments, which means that I have more disposable income to live on than I otherwise would have.” “I understand that the FHA can/will take that into account in computing my debt to income ratio. Is that true, and can you explain how it works?” FHA loan rules governing the debt-to-income ratio are found in HUD 4000.1, which has the following instructions to the lender, starting with the FHA definition | more...

November 6, 2015

FHA Loan Rules, Non-Borrowing Spouses, and Judgments

By Joe Wallace

A reader got in touch recently to ask if a financial judgment against a non-borrowing spouse could be a liability when applying for an FHA mortgage loan. The answer really depends on whether the borrower resides in a community property state, and whether community property laws in that state might have something to say about how a legally married couple applies for a major financial obligation such as a home loan. FHA loan rules have specific guidance for the lender in community property states when it comes to issues like debts, judgments or other financial issues affecting the non-borrowing spouse. These rules are found in HUD 4000.1 and state: “If the Borrower resides in a community property state or the Property being insured is located in a community property state, | more...