Articles Tagged With: FHA Loan Requirements

May 28, 2015

FHA Loan Pre-Approval and Credit Scores

One question that comes up frequently when talking FHA loans involves whether or not a borrower’s credit scores are affected by applying for pre-approval for an FHA mortgage loan. While we aren’t experts in credit reporting, and the FHA loan rules found in HUD 4155.1 do not address this issue, a bit of research into this issue turns up some interesting facts. According to the Kiplinger Magazine’s, “Could Mortgage Preapproval Hurt Our Credit?”, any kind of loan application has the potential to “ding” your credit rating. That, Kiplinger reports, is according to Barry Paperno, consumer operations manager for Fair Isaac (the company that created the FICO score system). “Typically, you would see a drop of five points or less,” says Paperno in the Kiplinger piece, which adds, “…when lenders request | more...

May 27, 2015

Shopping Around For An FHA Loan

By Joe Wallace

One thing that’s important for house hunters to do when looking for a home? Comparison shop. But that’s not just a good idea when it comes to measuring the price tag on a home; it’s also a very good idea to shop around for a lender in the same way you do looking for just the right home to buy with an FHA loan. A recent blog post on the HUD official site via The HUDdle discusses recent housing trends and developments in the home loan industry. One thing writer Ted Tozer notes, is that there has been a set of important developments in the industry as some major financial institutions dial back their participating in the mortgage lending market. Tozer writes, “As major banks have reduced their participation in | more...

May 26, 2015

FHA Loan Rules For Short Sales: A Reader Question

By Joe Wallace

A reader asks, “I filed a chapter 7 in 2009 and listed my home in the bankruptcy as it tuned out I tried to short sale but the bank told me no. so I filed and it discharged in 2009. The bank did nothing for 7 years. I moved out of the home in 2009 and it remained empty for 7 years. I purchased another home (hard money loan) in 2012. I improved my credit rating and I want to refi my home. The bank finally let me short sale the home in 2014 it sold. What is going on the lenders are telling me that there going by the short sale date not the bk date. Can you help?” There are two issues at work in these situations–FHA loan | more...

May 23, 2015

FHA MIP Rates: A Reader Question

By Joe Wallace

A reader asks, “I closed an FHA loan on 02/18/15 and was charged a rate of 1.689% for Mortgage Insurance Premium. The rates were reduced in January-15. Was I charged an incorrect rate?” This is a common question for some borrowers because their loans happened during a period of time where the change from the old FHA MIP rates to the new rates occurred. The short answer to this reader question is, “It depends”. The timing of the assignment of a borrower’s FHA case number is key in cases like these. According to a Frequently Asked Questions page found at HUD.gov, the deciding factor on whether a borrower got the old rate or the new one is the date when the FHA case number was assigned. According to HUD.gov, “The | more...

May 22, 2015

FHA Loan Rules, Bankruptcy, and Short Sales

By Joe Wallace

A reader asks, “My bankruptcy was discharged in August of 2012. We did not reaffirm the mortgage either. One year later I short sales the house (August of 2013 it was sold). The short sale is not on my credit report nor are any missed payments. I was in the process of a mortgage modification when I filed bankruptcy. The firm that I used (which was later investigated by the FTC for mortgage fraud) promised they could take 100,000 off my loan (apparently some things are too good to be true). This under the advice of multiple lawyers I filed bankruptcy.” “I worked w a previous lender who put me threw du (or bu- the underwriting test used by fha). I passed that but he later took the approval back | more...

May 22, 2015

FHA Loan Questions: Appraisal Outcomes

By Joe Wallace

A reader asks, “I am the seller and was told by the buyers inspector that fha required that Federal Pacific Electrical stab lok was required to be replaced due to the potential that it Might Cause a safety issue. Any electrical can have a potential safety issue. My home was built in 1987.” While there isn’t a specific question here, the implied question seems to be, “Why was this correction required during the appraisal process?”. Any correction or repair that comes from the appraisal process could be required because A) the condition fails to meet FHA minimum property requirements or B) the condition fails to live up to state or local building code or C) there is another law or rule which must be satisfied. FHA loan appraisal guidelines are | more...

May 18, 2015

FHA Loan Debt To Income Ratio Rules: A Reader Question

By Joe Wallace

A reader asks, “I am trying to purchase a house. My loans arent scheduled to begin repayment until Nov, of 2016, well over 12 months from now. I am currently enrolled. If you factor in what my loan payment will be, I am at a 46% debt/income ratio, if not, I am under the 41% line. My question is: Will my student loans count toward the debt/income ratio, even though I dont have to start paying them for another 18 months or so?” FHA loan rules in HUD 4155.1 Chapter Four, Section C addresses the student loan debt topic, as follows; “Debt payments such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing must be included by the | more...

What happens to my FHA loan in a natural disaster?

May 16, 2015

FHA Loan Occupancy Rules: A Reader Question

By Bruce Reichstein

A reader asks, “Is there a time requirement of the purchaser for moving into a recently purchased home with an FHA loan? Also, can the purchaser have family members move into the recently purchased home (FHA loan) instead of the purchaser?” In general, FHA loan rules require the borrower to the an owner-occupier. FHA single family home loans are for principal residences only, so the borrower must certify that he or she is buying a home for personal use. Additionally there is an occupancy requirement–FHA loan rules state the borrower must move into the home and use it as the primary residence within two months of the loan closing date. This information is found in HUD 4155.1, Chapter Four Section B, titled, “Eligibility Requirements for Principal Residences”. It begins by | more...

May 15, 2015

FHA Appraisals: A Reader Question

By Joe Wallace

A reader sent us a lengthy question recently about FHA appraisals. While won’t reprint the entire message here for the sake of brevity, we’ve kept the most relevant portions: “We are considering a HECM loan. The appraiser came out and we were not impressed. Prior to leaving, he told my husband and I that there was a couple of small things we needed to do before being able to close the loan(some peeling paint and a 1988 Cadillac inherited from my dad that was under our carport that we did not have licensed). Then we get a copy of the appraisal and under improvements he marked NO where it asks if there are any physical conditions that affect the livability, soundness, or structural integrity of the property. However, under reconciliation, | more...

May 15, 2015

FHA Loan Rules For Employment: A Reader Question

By Joe Wallace

A reader asks, “if one party has a temp position to perm and there is a letter from temp staff stating that she will be hired full time at the end of the 6 month probation period by the company she is working for can we be eligible for a fha loan or will it get denied?” FHA loan rules for verifying employment and income from that employment are found in HUD 4155.1 Chapter Four, Section D, which states in part: “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrowers employment for the most recent two full years, and the borrower must: –explain any gaps in employment | more...