Articles Tagged With: FHA Loan Requirements

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

March 20, 2015

FHA Loan Closing Costs

A reader asks, “Is the seller of a home to a buyer that is financing with a FHA loan required to pay the buyers closing costs?” FHA loan rules do not say the seller is required to pay closing costs on behalf of the borrower; in any case the seller’s contribution to the sale whether that is in the form of paying closing costs or other incentives is limited to six percent of the sales price of the property. Here’s a quote from the HUD booklet titled, “Shopping For Your Home Loan” which includes the following under Settlement Costs: “You can negotiate which settlement costs you will pay and which will be paid by the seller. The seller may contribute a lump sum amount or may agree to pay for | more...

March 19, 2015

FHA Loan Credit Requirements For Non-Occupying Co-Borrowers

By Joe Wallace

A reader asks, “Hi i am trying to get a mortgage but have good credit but low income. I was wondering if someone could help me be a non-occupying borrower with bad credit but excellent income a job help, basically use his income not his credit.” FHA loan rules are very specific about non-occupying co-borrowers. This is because there are many different types of circumstances where a borrower may have an occupying non-borrower, or an occupying co-borrower, or in the case of this reader question, a non-occupying co-borrower. Each of these circumstances is viewed slightly differently for several reasons, and there are circumstances that may apply to one type of borrower that don’t apply to another. For example, a spouse who occupies the home but does not borrow; this situation | more...

March 19, 2015

FHA Loan Reader Questions: New FHA Loans After Foreclosure

By Joe Wallace

A reader asks, “my husband property was forclosed on out of his control of his job moving to a different state can we try to by if we havent waited 2 years” This reader question doesn’t provide quite enough information to give a specific answer. FHA loans after a foreclosure are possible, but much depends on whether the borrower had an FHA home loan or not, and the borrower’s credit history following the foreclosure activity. Here’s what FHA loan rules in HUD 4155.1 Chapter Four Section A say about attempting to get an FHA loan after a previous home purchased with an FHA mortgage was foreclosed upon: “If the borrower has had past delinquencies or has defaulted on an FHAinsured loan, there is a three-year waiting period before he/she can | more...

March 17, 2015

FHA Loan Appraisals and Home Inspections

By Joe Wallace

A reader asks, “Just bought a home and while in crawl space installing drain tile I realized the main sewer line was leaking. The house was unoccupied for 2 years prior to purchase. I have an FHA loan and cannot afford to have contaminated soil removed and line repaired. I realize that I made a mistake buying this home but I felt protected from major issues in getting an FHA loan. What can I do?” The most important question in this situation is whether the borrower paid for a home inspection prior to purchase. It can be tempting for borrowers to rely on the appraisal alone to catch problems or issues with a house, but it’s never a good idea to do so. Why? FHA loan rules are clear–the FHA | more...

March 16, 2015

FHA Loan FICO Score Requirements: Are There Exceptions?

By Joe Wallace

Many potential FHA borrowers want to know if their FICO scores qualify them for an FHA mortgage; others want to know if they can qualify for an FHA loan even if their FICO scores aren’t quite high enough based on what they might have heard the FHA loan minimum scores are. Do participating FHA lenders have the power to make exceptions when it comes to certain qualifying factors or ratios associated with an FHA home loan? The simplest answer is that it depends greatly on the lender. In general, FHA loan standards permit a degree of flexibility on FHA loans if the lender determines that a borrower doesn’t quite meet the standards required for the loan. But when could a lender make such exceptions based on the FHA loan program | more...

March 13, 2015

FHA Loan Reader Questions: Seasoning Period Following Bankruptcy

By Joe Wallace

A reader asks, “On 3/11/15 I was told by a potential lender that consumers who have claimed bankruptcy must wait 4 years to potentially qualify for ANY loan… conventional or FHA. My bankruptcy was discharged in August 2013 and I have been rebuilding my credit ever since…. with the hopes that I could start looking at buying a home at the near 2 year mark, post discharge. Can someone please clarify this for me? And give the source of the data that is accurate? The lender just blew me off…” This reader’s question asks if what a lender told her about waiting four years after bankruptcy may be true if those are that particular lender’s standards. Those standards may vary from bank to bank, lender to lender. But if the | more...

March 13, 2015

Are You Ready For An FHA Loan Application?

By Joe Wallace

Are you ready for an FHA home loan application? If you’ve been considering your options, it’s a very good idea to create a list of to-do items in the preparation time leading up to your application. The first thing to do is to make sure you’re ready for your loan by checking your credit reports and FICO scores. Your repayment history and FICO score play a big part in whether you get approved or denied for the loan. Hand in hand with those factors is the amount of debt you have getting paid every month versus how much income you have. Reducing the amount of debt–especially credit cards and related types of debt–can help your application’s chances. Some borrowers don’t think about saving up for their home loan beyond making | more...

March 12, 2015

FHA Loan Eligibility Rules: Divorce and Foreclosure

By Joe Wallace

A reader asks, “Foreclosure exception question. Say a couple was looking to purchase a home, but the husband had a foreclosure which occurred under his name. Would they be able to qualify for a NJ mortgage using divorce as the exception to the three year rule, especially when the divorce decree is dated for one specific year but the foreclosed mortgage loan is from two years after the divorce???” “I am very curious as to this because to me it wouldn’t make sense that the divorce circumstance for exception would be an option due to the fact that this person took out a mortgage for a property which he was not living in two years after his divorce took place, and placed it solely in his name? I would think | more...

March 11, 2015

FHA Loans and Debt-To-Income Ratio: A Reader Question

By Joe Wallace

A reader asks, “Our daughter and son in law are trying to obtain a FHA loan. They are only using my son in law for the loan because our daughter’s credit score is too low. However his income/debt ratio is too high because of a car loan.” “We have agreed to pay off the car to lower the monthly income/debt ratio. Their combined income is enough to cover the mortgage and pay us back. How will this affect their loan application?” Unfortunately, there’s no clear way to address this question for a variety of reasons. There are many variables including whether or not the couple resides in a community property state, where state law will have a say in how the lender may or may not consider the FHA loan | more...

March 9, 2015

FHA Loan Questions: Seller Concessions

By Joe Wallace

A reader asks., “I saw a listing agent who stated in an MLS listing that the seller can only contribute up to 1% of sales price to an FHA qualified buyer’s closing costs. (She was implying not to ask for over 1% seller concession because of this FHA requirement). Is that correct? On your site I read that figure to be a maximum of 6%. Can you clarify please. The home is in Apache Junction, AZ (Phoenix suburb and county of Maricopa).” FHA loan rules state that any seller concession that exceeds six percent is considered an inducement to purchase and will result in a dollar-for-dollar reduction in the loan amount. This is true for all states, not just the one in the reader question, but it is important to | more...