Articles Tagged With: FHA Loan Requirements

April 2, 2015

FHA Home Loan And Refinance Loan Options

If you have never explored your FHA loan options before, you should know what your options are for both refinance loans and new purchase loans. Did you know that FHA mortgages have, in most cases, a lower down payment requirement than conventional loans? The credit-qualifying rules for FHA loans and refinance loans is also more lenient than many conventional loans. For new purchase loans, the type of property you can buy with an FHA mortgage is flexible. You can buy a typical suburban-style home, a condo unit, a mixed use building that is primarily residential in nature, and even a farm home (the loan would be for the residence only). Some lenders may also be willing to issue loans for manufactured housing or modular homes. The type of loan you | more...

April 1, 2015

New Purchase FHA Mortgage Loans: Some Basics

By Joe Wallace

If you are thinking about applying for an FHA mortgage instead of a conventional home loan, there are aspects of the FHA loan program you should know about before starting the house hunting process that will save you time. Knowing what types of homes you can purchase with an FHA loan, for example, will help you focus your efforts. FHA loan rules published in HUD 4155.2, the Lender’s Guide To The Single Family Mortgage Process, states: “FHA’s single family programs are limited to one- to four-family properties that are owner-occupied principal residences. FHA insures mortgages secured by • detached or semi-detached dwellings • manufactured housing • townhouses or row houses, or • individual units within FHA-approved condominium projects.” The FHA will not approve or guaranty mortgage loans that are secured | more...

March 31, 2015

FHA Clarifies Rules For FHA HECM Loans

By Joe Wallace

The FHA and HUD have clarified rules that govern how FHA Home Equity Conversion Mortgage Loans are handled with regard to “life expectancy set-asides” and calculation of property taxes as part of a borrower’s debt-to-income ratio. FHA Mortgagee Letter 2015-09, “establishes a monthly growth rate for Life Expectancy Set-Asides and clarifies a discrepancy between the HECM Financial Assessment and Property Charge Guide and the model HECM Financial Assessment Worksheet transmitted with Mortgagee Letter 2014-22.” What is a “life expectancy set-aside” and how does the new clarification affect it? According to the FHA, “The Life Expectancy Set-Aside (LESA) is used for the payment of property taxes, and hazard and flood insurance premiums, and will increase each month at a rate equal to one-twelfth of the sum of the mortgage interest rate | more...

March 31, 2015

FHA Short Refinance Program: A Reader Question

By Joe Wallace

A reader asks, “Will the FHA Short Refinace Program give the lowest interest rate? Secondly, will there be a refinance charge? Does this work with Fannie Mae?” This reader question refers to the FHA Short Refinance Loan Program which was extended last year to 2016 and is intended for borrowers who find theselves “upside down” or “underwater” on their home loans. According to an FHA fact sheet published at FHA.gov: “FHA’s Refinance of Borrowers in Negative Equity Positions (“Short Refinance”) is available to help people who owe more on their mortgage than their home is worth because their local markets have seen large declines in home values. The temporary enhancements to the existing refinance program apply to loan applications with FHA case numbers issued on or after September 7, 2010 | more...

March 28, 2015

FHA Loans and Community Property Laws: A Reader Question

By Joe Wallace

A reader asks, “I have a previous property from my divorce showing as a foreclosure on my credit report. The property has actually been in litigation for the last three years and has not been forclosed. My current husband and I are trying to purchase a new home. Do you have any suggestions? Should I apply as a non purchasing spouse?” The course of action suggested in the reader question may be a good one, but there are some variables that can affect whether or not it is possible to do so. The first of these is whether or not the reader lives in a community property state where the laws dictate how shared financial responsibility in a legal marriage is handled. Community property laws may require the applicant(s) and | more...

March 26, 2015

FHA Loans and Non-Traditional Credit Histories

By Joe Wallace

There are many situations where a new borrower might want to apply for an FHA home loan, but without bringing a “traditional” credit history to the process. Do FHA loan rules permit a loan even when the borrower doesn’t have a typical credit history, has chosen not to use credit cards, etc? HUD 4155.1, the FHA rulebook for lenders, does make provisions for this. There’s a section of the rules governing what the FHA terms a “Non-Traditional Credit Report” or NTMCR for short: “NTMCRs are designed to assess the credit history of borrowers who do not have the types of trade references that normally appear on a traditional credit report. An NTMCR can be used as a • substitute for a TRMCR or an RMCR for a borrower without a | more...

March 25, 2015

Significant Changes In Borrower Financial Status: An FHA Loan Question

By Joe Wallace

A reader asks, “I am in the process of buying a new home which is scheduled to be closing is by April 30th.My loan processor had just asked me last week to write a letter explaining why there is a significant overdraft fees on my checking account?. i am worried. please advise.” In the same way that borrowers are advised not to apply for new lines of credit leading up to a home loan application, they are also urged to maintain a record of steady, on-time payments until loan approval. The reason for this is simple–the lender is required to document and make loan approval decisions based on any “significant changes” to a borrower’s financial position. A home loan is a major financial commitment and a borrower who has significant | more...

March 24, 2015

Basic FHA Loan Eligibility Requirements

By Joe Wallace

We get many questions about FHA loans–questions about FICO score requirements, questions about credit and income, residency, etc. The FHA official site (www.fha.gov) has many answers to these questions–but what ARE the basic requirements for an FHA mortgage? FHA loan rules specify a minimum FICO score needed to qualify for maximum financing, and a minimum FICO score for basic eligibility with a larger down payment in cases where the applicant’s FICO score is close to the margins of acceptability. “FHA insures mortgages” the official site says, “made by approved lenders to individuals and nonprofit and government agencies that are approved to participate in HUD’s programs; HUD does not loan money to homebuyers.” The FICO score requirements mentioned previously (580 for maximum financing, and FICO scores above 500 for program eligibility | more...

March 23, 2015

FHA Loan FICO Score Requirements

By Joe Wallace

We get many questions and comments about FHA home loans where FICO scores are concerned. Some borrowers seem to have doubts about whether or not they can qualify for an FHA mortgage loan or refinance loan because of their FICO scores and other financial qualifications. Consider this recent reader comment that came in: “Have a score of 565 & trying to Get A Home Loan.” While there’s no specific question mentioned, it’s easy to see the reader is looking for some kind of information on FHA loan FICO score minimum requirements. Here’s a chart that’s printed in HUD 4155.1 which lays out the minimum required FICO scores needed to get an FHA mortgage: Some who are new to applying for a home loan may wonder what it means to be | more...

March 20, 2015

FHA Loan Questions: Tax Records

By Joe Wallace

A reader asks, “Is an fha requirement for a home buyer to have two years of taxes?” This is a difficult question to answer in general except to say that borrowers should be prepared to include tax information as part of an FHA loan application. The actual requirement can vary depending on lender standards, state law, and whether the borrower is self employed or not. Consider what FHA loan rules found in HUD 4155.1 Chapter Four Section D have to say about self-employed FHA loan applicants, or those who own a family business: “Self employed borrowers must provide –signed, dated individual tax returns, with all applicable tax schedules for the most recent two years –for a corporation, “S” corporation, or partnership, signed copies of Federal business income tax returns for | more...