Articles Tagged With: FHA Loan Requirements

August 29, 2014

FHA Maximum Loan Amounts: Some Basics

FHA loan applicants often want to know how much they can borrow with an FHA mortgage. There’s no set answer to that question since the FHA loan amount depends on the appraised value of the home and other factors. Borrowers will need the amount of the sale price of a home before a loan amount can be properly calculated. Some borrowers want to know if they can apply for more than the sale price of the home with the intent of taking the excess funds for other purposes. This is not permitted for FHA home loans, so borrower who ask “how much can I borrow?” with that idea in mind should know it’s not a possibility. But the FHA loan basics for maximum loan amounts are spelled out for the | more...

August 28, 2014

FHA Mortgage Rate News For Thursday August 28 2014

By Joe Wallace

FHA mortgage loan rates have been lower this week in small increments, and while many borrowers could see the difference in rates reflected in their closing costs rather than the actual rate number itself, the move lower does benefit the borrower. Mortgage loan rates in general have approached their lowest levels of the year (best execution), and we’ve seen movement both upward and downward this summer only in a narrow range. The causes of this summer’s rate changes are varied, including breaking financial news from Europe. Add to that investor reaction to the Ukraine crisis, plus the situation in Gaza. At home, bond auctions, economic data releases such as the GDP and Employment Situation Report and other financial information have also influenced rates within the narrow range we’ve seen all | more...

August 28, 2014

FHA Loan Questions: Loan Changes

By Joe Wallace

A lengthy reader question came in recently, which we have edited for space and brevity’s sake. The reader asks, “I am a first time homebuyer & the originator of my FHA loan was (lender name deleted). In qualifying, it was clear my max affordable payment, including principle & interest, escrow, MIP, & interest was $1500 per month.” “During the underwriting process I kept in touch with the broker to ensure no substantial increase in my monthly payment. On the day of closing my payment came in over $400 higher than originally quoted due to an increase in escrow estimation. My broker acted like he was surprised, then told me he later his primary concern was getting my loan closed within 90 days to prevent a new credit report being pulled | more...

August 25, 2014

FHA Loan Down Payment Rules: A Reader Question

By Joe Wallace

A reader asks, “Without having the 20% down on a property at the purchase of a home, can the loan be refinanced, to achieve the 20% in a short time period less than 3 years?” It’s not entirely clear what the reader is getting at in this question, but in general, FHA loan requirements include a minimum down payment of 3.5% which must be paid on or before the loan’s closing date. This is known as the “minimum cash investment” and is non-negotiable. It must be paid up front. Some lenders may, depending on circumstances, require a larger down payment as a condition of loan approval. This may be due to credit issues which require the loan to have “compensating factors” which can include a down payment of more than | more...

August 22, 2014

FHA Mortgage Rate News For Friday August 22 2014

By Joe Wallace

If you are looking for an FHA home loan, chances are good you are paying attention to the rise and fall of FHA mortgage rates. There are many reason why these rates can change day to day or week to week. One factor—economic data releases that suggests weakness in the economy. This data can influence rates and push them lower, or, conversely, when economic/jobs data indicates improvement, rates can and sometimes do move higher as a result. But other factors can push rates higher or lower, too. We found a good example of that recently–mortgage rates moving lower based on investor reaction to world headlines. Last Friday, mortgage rates hit their lowest levels in the last eight weeks or so. That drop in rates was attributed to how investors reacted | more...

August 19, 2014

FHA Loan Rules: Qualifying Commission Income

By Joe Wallace

There are many questions about who can qualify for an FHA mortgage loan. One type of question involves whether FHA rules have a minimum income requirement (they do not) and other types of FHA loan questions involved what kind of income may qualify for an FHA mortgage. FHA loan applicants who earn some or most of their income through commissions do well to ask these sorts of questions–what do the FHA loan rules say about commission earnings? The FHA loan rulebook, HUD 4155.1, spells out the requirements for verifiable commission income. If income is declared verifiable, it may be counted towards the debt to income ratio your lender will calculate when processing your loan. HUD 4155.1 Chapter Four discusses commission income as follows: “Commission income must be averaged over the | more...

August 18, 2014

How Long Are FHA Appraisals Valid? A Reader Question

By Joe Wallace

A reader asks, “Our home was on the market, the buyer got an FHA Appraisal, their financing fell through yesterday, the appraisal was done last week, Will the new buyer who is FHA also have to get a new appraisal or can the first one be used since it has only been two weeks?” FHA loan rules covering appraisals are found in HUD 4155.1, which states: “FHA appraisals on existing properties are valid for six months. However, appraisals cannot be reused –during the six month validity period once the mortgage for which the appraisal was ordered has closed, or –for a subsequent refinance, even if six months have not passed.” Re-use of an FHA appraisal is specifically addressed in the FHA loan rulebook when it comes to refinance loans: “A | more...

August 12, 2014

FHA Loan Approval, FHA Loan Denial: The Process

By Joe Wallace

When you apply for an FHA loan, sometimes the hardest part is waiting to hear back from the lender that the loan has been approved and all can move forward. Did you know that FHA loan rules have a process for the lender to follow when the loan has been approved or denied? HUD 4155.1 has the guidelines and instructions to the lender for loan approval or rejection. Chapter One of this document has a section called Borrower Approval Or Rejection and tells the lender that, when the loan has been approved, there are a set of steps to be followed. The lender: • records the results of the credit analysis on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary • enters any modification of the mortgage amount or approval | more...

August 8, 2014

Who Can Get An FHA Home Loan?

By Joe Wallace

Do you know who is considered legally eligible to apply for an FHA home loan?There are many myths about FHA home loans. One type of myth involves the basic eligibility for an FHA mortgage. Some mistakenly believe the FHA is only for disadvantaged or low-income borrowers. There may be an assumption about a maximum income limit that is not true, and others may assume that the FHA program is only for those who have never purchased a home before. The truth is that any borrower who can qualify with credit scores, debt-to-income ratios and other financial data is able to apply for an FHA mortgage loan. What does the FHA loan rulebook (HUD 4155.1) say about the basic eligibility requirements for an FHA mortgage? According to Chapter Four of the | more...

August 4, 2014

FHA Loan Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “I was discharged from Chapter 7 in 2010, and the sheriff sale on my home was June 27, 2012. The mortgage company is telling me that the only way to do a conventional loan after two years from the sheriff sale, is to put 15% down. Is this correct?” We can’t comment on conventional loans–that’s outside the scope of our writing here, which covers FHA loans. However, the question is still valid when applied to an FHA loan application–what’s the right answer? Unfortunately, there is no single answer because in cases like these, lender standards may apply. The FHA loan program has minimums including a minimum down payment requirement of 3.5%. But in cases like these lender standards may require the borrower to have a longer waiting | more...