Articles Tagged With: FHA Loan Requirements

October 9, 2014

HUD Settles “Redlining” Discrimination Complaint

Have you ever wanted to apply for an FHA home loan only to experience what may be illegal discrimination forbidden by the Fair Housing Act? In some cases the discrimination may not even reach the borrowers themselves, as evidenced by a recent settlement announced by the HUD official site. According to a October 2014 press release issued on the FHA/HUD official site, “The Department of Housing and Urban Development (HUD) announced today that it has negotiated a Conciliation Agreement with Illinois-based Midland States Bancorp, resolving allegations that the bank avoided doing business in predominantly African American and Hispanic neighborhoods in St. Louis, Missouri and northern Illinois.” Federal Fair Housing Act laws state that it is illegal to, “deny or discriminate in the terms and conditions of a mortgage or loan | more...

October 8, 2014

FHA Loan Reader Questions: Cisterns

By Joe Wallace

A reader asks,“I am planning to sell my Manufactured Home on a permanent foundation in So. California. Water to the home is provided by a well on the property. Due to a drought in the area for the last 5 years my well still works but is not producing enough water for my usage.” “To remedy this problem I have had a 5,000 gallon storage tank installed on the property with q booster pump that serves the home. I have a water truck bring me “city water” to fill the storage tank when I need it to supplement the low producing well. This arrangement works totally fine. My question is: will this situation prevent a qualified buyer from being approved for an FHA loan to purchase the property?” FHA loan | more...

October 6, 2014

FHA Loans, Projected Income: A Reader Question

By Joe Wallace

A reader got in touch with a question related to our post “FHA Loan Answers: New Job Income” which included the following: “Many FHA loan applicants want to know if taking a new job will affect their chances at FHA loan approval. FHA loan rules are designed to help guide loan officers through the qualification process for a variety of scenarios including those where the borrower may have “projected income” that could be factored into the borrower’s debt-to-income ratio. What do FHA loan rules say about projected income? How is it defined? The answers to these questions and more can be found in HUD 4155.1 Chapter Four, Section E. “Projected income is acceptable for qualifying purposes for a borrower scheduled to start a new job within 60 days of loan closing | more...

October 1, 2014

FHA Single-Family Home Loan Occupancy Rules

By Joe Wallace

FHA loan rules for single family home loans include an occupancy requirement. This requirement is designed to encourage single-family borrowers and exclude investors from using single-family FHA mortgage loans to purchase investment property. Why? The intent of the single-family home loan program is to help eligible borrowers get into affordable housing using a low-cost, lower-than-conventional loan interest rate. These rates are not intended to help investors buy property for non-occupying rental or outright sale. What are the FHA loan rules for occupancy? The full explanation of the rules can be found in HUD 4155.1 Chapter Four Section B, which starts off by defining what a “principal residence” is. A home purchased with a VA mortgage is required to be used as the principal residence, so it’s good to know what | more...

September 29, 2014

FHA Loan Terms and Payment Plans: A Reader Question

By Joe Wallace

A reader asks, “I am trying to relocate to a new home with my three small children and would like to use an FHA loan to purchase it. I was told about a 40 yr note with yearly payments? Is there such a program? I am currently enrolled in school, working towards my bachelor’s degree in nursing. I have access to some funding for a down payment, approx $30,000. I have also located a home that I want to purchase. 3 bed, 3 bath on 25 acres, approx value of $89,900. Can someone please help me find the right loan to purchase this home? FHA loans have specific rules about the term of the loan. According to HUD 4155.1, under the section titled Maximum Loan Limits, Mortgage Amounts and Mortgage | more...

September 23, 2014

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “I have a plan to pay off my student loan this year which is 18,000.00. My credit score is 565. This will leave me with 0 debt. Will it also improve my credit score and chances of getting a home loan?” These types of questions are difficult to answer because credit reporting agencies have their own criteria for evaluating credit, and apply their own standards for factors that might affect scores pushing them higher or lower. You may find that your FICO score reported by one agency are not the same as reported by another. That’s why FHA lenders look for a FICO score average to determine eligibility. Having no debt is certainly a plus for an FHA loan application, but a borrower’s credit activity in the | more...

September 18, 2014

FHA Minimum Property Requirements: Central Air

By Joe Wallace

A reader asks, “I am trying to purchase a home with an FHA loan. The central air in the house I’m trying to purchase is not working, however, the owner has window units in each room. They all work and cool the house very nicely. I was planning on replacing the central air after purchasing the home. I’ve been told the house will not qualify because the central air is not working. Won’t the window units suffice as meeting the minimum standards of living?” One interpretation of the FHA minimum property standards in this situation would be that it’s not the presence of the window units in the home that would be the issue, but rather than an installed appliance/system in the home is not functioning properly. The home may | more...

September 18, 2014

FHA Mortgage Rate News For The Week of September 15 2014

By Joe Wallace

We’ve seen recent trends in FHA mortgage loan rates towards higher numbers, but this Wednesday was a much anticipated day for the rates as investors and market watchers waited to hear the Fed made a policy announcement. The announcement did put upward pressure on rates, but we’ve seen some important movement in them already– September 12 was the day when best execution rates for FHA mortgage loans were pushed out of the previous single number comfort zone of 3.75% and back into a range of rates between 3.75% and 4.0, best execution. This is the first time in many weeks, if not months, that we’ve seen rates for FHA mortgages (best execution) move back into the 4% zone. On Wednesday, September 17, the range of FHA loan rates persisted, thanks | more...

September 15, 2014

Assessments Versus FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “How is the home value assessed for a 203K, fixer-upper loan? For instance if we bought a home for $200,000, and also borrowed $30,000 in repair funds to improve the home, would the home value continue to be assessed at $200,000 or could an appraisal actually be used in this case? I have read that home value with FHA PMI purposes will only be assessed at the LOWER of an appraisal and the original loan amount.” For questions like these, terminology is important when it comes to arriving at the answer needed. For example, there is a big difference between an assessment and an appraisal–and appraisal is done by an FHA-assigned professional to determine the value of the property to be purchased or financed by an FHA | more...

September 11, 2014

FHA Loan Myths: Refinancing With Your Existing Lender

By Joe Wallace

So you have a home loan–a conventional mortgage, VA loan or even an existing FHA loan–and you want to refinance. Some borrowers go right for their existing lender to apply, even if the interest rate or terms & conditions aren’t as advantageous as those offered elsewhere. Are you REQUIRED to use your existing lender for a refinance loan? No. Borrowers are free to refinance an existing home loan with another financial institution. This is true even of an existing FHA mortgage that you might be paying on–if you wish to refinance, you can search for another participating FHA lender who can work with you and your circumstances. The key to getting a better deal on your interest rate and terms is to comparison shop between your existing lender and any | more...