Articles Tagged With: FHA Loan Requirements

March 12, 2014

FHA Loan Answers: Can I Skip Payments On My Mortgage If I Refinance?

When considering your FHA home loan refinance options, there’s a list of common questions many borrowers need answers to before deciding on the right FHA refinance loan. One such question involves the state of the current mortgage before the new loan is approved. Can a borrower skip a payment on an FHA or conventional mortgage as the new FHA refinancing loan is approved? FHA loan rules address this issue in HUD 4155.1, Chapter Three, Section A. It says: “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes. Example: If the borrower is closing on April 8, he/she must have made the March payment within the month of | more...

March 10, 2014

FHA Loan Reader Questions: Employment Verification

By Joe Wallace

A reader asks, “I have been employed at a job for 5 years, and another for 1yr 3 months and looking to quit both for a 3rd job I have been employed at for 4 months. the third job is currently under the table until I am able to be full time. we are looking to buy our house in April. Should I wait to quit the other jobs or will I be okay?” We can’t give advice on whether to keep or quit a job (that’s outside the topics we cover here) but one thing that’s important to remember in these types of situations is the lender’s requirement to verify both income and employment. Any job that is, as the reader question puts it, “under the table” would be | more...

March 7, 2014

FHA Streamline Refinancing Loans Net Tangible Benefit Table

By Joe Wallace

Recently we wrote about the requirements for FHA streamline refinance loans to have a “net tangible benefit” to the borrower. The type of benefits mentioned in the FHA loan rulebook for streamline loans (in general) include a lower interest rate and/or monthly payment for the borrower. The purpose of an FHA streamline refinance loan is to help a home owner with an existing FHA mortgage get into a more affordable mortgage loan payment without an FHA required credit check or appraisal. (The lender may require one anyway.) Since there are many different types of FHA loans available, the net tangible benefit for the borrower may be different depending on the kind of loan being refinanced. The FHA has a table showing all the requirements for the different types of loans | more...

March 3, 2014

FHA Loan Waiting Periods Post-Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “In 2007 I applied for bankruptcy and got dismissed in 2008. The creditors didn’t accept my plan. In 2008 house got sold. I need to know the waiting period before applying for an FHA loan.” There are two types of bankruptcy mentioned by name in the FHA loan rules found in HUD 4155.1. One is Chapter 7, the other is Chapter 13. Since the reader didn’t mention which type of bankruptcy, we’ll quote both guidelines. For Chapter 7, HUD 4155.1 Chapter Four states: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have: –re-established good credit, or –chosen not | more...

February 27, 2014

FHA Loan Rules: A Reader Question About Earnest Money

By Joe Wallace

A reader asks, “A buyer made an application for a FHA loan to purchase a property. The buyer was not able to obtain FHA loan approval by close of escrow and rather than to cancel the contract and receive the earnest money back the buyer and seller agreed in writing to extend the contract’s close of escrow provided the earnest money become unrefundable if the buyer could not close escrow for any reason.” “The buyer was not approved for FHA financing and cancelled the contract yet is claiming FHA overrides the written contract and FHA states the earnest money must be returned to the buyer when the buyer is denied aFHA loan. Does FHA have some sort of rule or authority over a legal contract between buyers and sellers for | more...

February 25, 2014

FHA Home Loans: What The FHA Will And Won’t Approve

By Joe Wallace

If you’re looking for an FHA guaranteed home loan, it can be a very big help to know in advance what kinds of properties the FHA will and won’t approve loans for in its single-family home loan program. There are sometimes misconceptions about the FHA single-family home loan program; some borrowers are interested in loans for commercial buildings or properties, but single-family home loans are intended for purchasing a dwelling for the borrower’s personal use. The FHA’s list of approved and unapproved uses for an FHA mortgage make it fairly obvious how these loans can be used, but if you’re new to the program those details aren’t always as clear. You can save a lot of time knowing up front what’s allowed under the FHA mortgage program. The rules for | more...

February 21, 2014

FHA Loan Answers: Can The Lender Pay Closing Costs On An FHA Mortgage?

By Joe Wallace

There are a lot of rules about the closing costs associated with an FHA mortgage loan. For example, the rules in HUD 4155.1 state that closing costs cannot be considered part of the borrower’s required down payment. The minimum cash investment requirement is separate from the FHA loan closing costs and must be paid in addition to those costs. There are rules governing how much a seller can contribute to closing costs, and there are rules about what costs can and cannot be charged to the borrower. Some FHA loan applicants may wonder if there are any provisions for the lender to pay closing costs; after all, the seller may contribute so why not the lender? This practice is allowed under VA home loan rules–it’s known as “premium pricing” and | more...

February 7, 2014

FHA Loans After Delinquencies On A Previous FHA Mortgage

By Joe Wallace

After the housing market crisis that started in 2007, many home owners found themselves in trouble on mortgages. Some simply walked away from their loans, others tried to avoid default and foreclosure, while still others initiated short sales or sold their property for the market value at the time which was most likely far less than they expected to get for the property. Picking up the pieces after something like that can be difficult, and many borrowers wonder if they could be eligible once more for an FHA home loan now that times have changed, markets have improved, and the financial positions of many have also gotten better. For some, the question is, “Can I get an FHA loan after having a past delinquency or going into loan default on | more...

February 5, 2014

FHA Loan Income Requirements–Is There A Minimum? A Reader Question

By Joe Wallace

A reader asks, “My credit score is 720 and is my first time to buy home , what is the minimum income to qualify to FHA or another Government loan?” There is no minimum income requirement for FHA home loans. Instead, the borrower’s income is analyzed and compared with the amount of the applicant’s monthly financial obligations. A calculation known as the debt-to-income ratio is used to qualify the borrower. According to the FHA loan rules found in HUD 4155.1, “When computing the debt-to-income (DTI) ratio, the lender must include the following recurring obligations: • monthly housing expense, and • additional recurring charges extending ten months or more, such as − payments on installment accounts − child support or separate maintenance payments − revolving accounts, and − alimony.” The rulebook | more...

January 31, 2014

FHA Loan Occupancy Rules: A Reader Question

By Joe Wallace

A reader asks, “With a FHA Arm 5/1 or Section 251 loan, how long do I have to live in the house before I can sell it?” This may seem like a tricky question. FHA loan rules for single family home loans found in HUD 4155.1 do list occupancy requirements. According to Chapter Four: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.” But that rule says nothing about the borrower’s ability to sell the property. Borrowers are | more...