Articles Tagged With: FHA Loan Requirements

July 1, 2015

FHA Loan Reader Questions: “Is This True?”

One very common type of FHA loan question we get in the comments section here involves situations where the applicant was told by a lender or another party that “X, Y, or Z is required to get FHA loan approval”. The question we get from readers in these cases is simply, “Is this true?” Answering such questions is tricky because the answer depends on whether the lender is speaking about the policies of a particular financial institution or the policies of the FHA loan program itself. Borrowers should remember that FHA loan rules spell out a set of requirements, minimum standards, and policies for the FHA loan program in general, but those things are not the only rules that will govern an FHA home loan or refinance loan transaction. Did | more...

June 27, 2015

FHA Loans Post-Bankruptcy? When To Apply?

By Joe Wallace

Borrowers who have filed for bankruptcy, or who have had other financial difficulties resulting in negative credit, may have questions about the timing of their next home loan application. We get many reader questions about this–some ask “When can I apply for a new loan?” or, “How long should I wait until I apply?” Others want to know if their credit scores are good enough, writing that they have scores within a certain range and whether those scores are enough to qualify. Bankruptcy, foreclosure, and other negative-credit actions may require specific waiting periods before you can apply again. Some of these are dependent on circumstances, lender standards and other factors–there often is no one set answer for borrowers who meet certain parameters. If you have these types of questions, one | more...

June 25, 2015

FHA Home Loan Rules and Lender Requirements

By Joe Wallace

We get lots of questions about the specifics of FHA home loans. Some of those questions involve areas that may not be covered specifically by FHA loan rules. Among the questions we got recently, there were some about the loan rules that cover a borrower’s employment status. “I got laid off from my contractor job and rehired elsewhere. The lender is asking for another paystub from the current employer in order to move forward with the loan. Is this true?” FHA loan rules may or may not have a say in such cases, but when the lender informs the borrower that X, Y, or Z might be required in order to move forward with the loan, your loan officer may be referring to the lender’s standards and not necessarily FHA | more...

What happens to my FHA loan in a natural disaster?

June 25, 2015

FHA Loan Debt To Income Ratios

By Joe Wallace

Are you concerned about your debt to income ratio going into the FHA loan application process? Do you wonder how your chosen FHA lender will view your existing debts and whether debts that are scheduled to be paid off at some point in the near future might affect your FHA loan application? It helps to know what the FHA loan rulebook says about a borrower’s overall credit worthiness. At the time of this writing, the FHA and HUD are preparing to transition to a new FHA loan rulebook, but the previous references still apply until then. On the FHA official site you will find HUD 4155.1, which includes a section in Chapter Four about how the lender is to analyze the borrower’s credit. That section says in part: “When analyzing | more...

When Is An FHA Loan Better Than A Conventional Loan?

June 24, 2015

FHA Loan Minimum Property Standards

By Joe Wallace

When you’re shopping for the home you want to purchase with an FHA mortgage, it’s logical to wonder what kinds of standards the property must meet in order to qualify for an FHA loan. FHA minimum standards address a variety of issues including a home’s location, its condition, and how the current state of the home may affect its future value. At the time of this writing, HUD 4155.2 Chapter Four has a set of basic standards that guide the FHA appraiser, which start with the following: “The site conditions of a property must be free of health and safety hazards.” That’s followed by some guidance on homes with lead-based paint. “If the property was built before 1978: –the seller must disclose known information on lead-based paint and lead- based | more...

June 23, 2015

FHA Loans For Eligible Properties

By Joe Wallace

Recently we posted about two types of property you cannot purchase using an FHA home loan: houseboats and recreational vehicles. The reasons you cannot get an FHA-guaranteed home loan for these things is because they cannot be affixed to a permanent foundation. So what kinds of property can you purchase–or refinance–with an FHA loan? Many would assume that a typical suburban home is allowed, and that is true. But so are condo units in FHA-approved condominium projects, manufactured homes, and many other types of property you might not find in a typical neighborhood in the ‘burbs. FHA loan rules currently found in HUD 4155.2 at the time of this writing spell out the list of properties a lender may offer FHA loans for. They include the following guidelines to the | more...

June 22, 2015

FHA Loans For Houseboats and RVs?

By Joe Wallace

One very common question about FHA loans involves the type of properties eligible for a single-family loan. FHA loan rules state that certain types of properties cannot be considered eligible for an FHA loan, including condo-hotels, time shares, and seasonal homes. One of the sticking points for these properties when it comes to the FHA loan rulebook is that there is either intermittent occupancy (due to the nature of a condo-hotel, for example) or occasional occupancy intended for the home to be purchased with the FHA loan. Unfortunately, in these cases the FHA loan occupancy requirement is often what bars the loan–you are required to be an owner-occupier of the property you buy with an FHA single-family mortgage loan. But what about properties where the borrower does intend to live | more...

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

June 19, 2015

FHA Appraisals: Pass Or Fail?

By Joe Wallace

We field many questions about FHA home loans. Some of those questions have to do with a borrower’s appraisal process and whether certain conditions will cause the home to pass or fail an FHA appraisal. One variation on the types of questions we get concerning appraisals goes like this: “We are buying an a home that failed initial appraisal for small repairs. We made repairs to X, Y, and Z, but had to make the repairs to one area as a make-do or temporary fix. Will this pass the re-appraisal?” There are several issues at work here. The first is correcting a misconception about the appraisal process itself. When a home gets appraised for an FHA loan and corrections or repairs are listed which must be made as a condition | more...

June 18, 2015

FHA Loans, Refinance Loans, and Missed Mortgage Payments

By Joe Wallace

We get many reader questions about FHA refinance loans. Some of those questions involve what the lender might do if the borrower has missed mortgage payments leading up to the refinance. The short answer to these types of questions is that it depends on the type of refinance loan in question and the reason for the loan. All FHA refinance loans require the borrower to be current or to be brought current on the loan–that could mean in some foreclosure avoidance scenarios that the missed mortgage payments are added into the new loan amount. For borrowers who are not seeking foreclosure avoidance, but rather simply refinancing the property, there may be a 12 month seasoning period or mandatory waiting period which must elapse between the last missed payment and the | more...

June 13, 2015

FHA Mortgage Loan Interest Rates: Still Near 2015 Highs

By Joe Wallace

We’ve been posting more about home loan interest rate trends as of late–rates have been moving higher in the last few weeks to what some industry professionals term 2015 highs. Next week we are due for an important, and highly anticipated announcement from the Federal Open Market Committee (FOMC) which has the power to influence mortgage loan rates depending on investor reaction to it. The big debate among some market watchers going into next week is whether or not the FOMC announcement WILL affect rates, or if European economic news will overshadow it. We’ve seen behavior like this before–a major, market moving event being overlooked in favor of breaking news from elsewhere. So it’s not entirely clear which way rates could move next week, except that it is reasonable to | more...