Articles Tagged With: FHA Loan Requirements

August 12, 2016

FHA Loans and Social Security Income

A reader asks, “I don’t understand if I have a 1099 and I have a benefits letter, and the letter that states at the end of the year what I am getting for the following year, why I am being asked or can be asked for something that states I will get social security for 3 years? There is nothing that says social security will give this to me or a name for it.” FHA loan rules governing Social Security income are found in HUD 4000.1, page 195 under “Other Sources Of Effective Income”. The rules require the lender to make a distinction between “effective income” which would continue for at least three years of the new loan, and “compensating factors” in the case where the lender cannot establish that | more...

July 26, 2016

FHA Loan Questions: Unpaid Tax Liens

By Joe Wallace

A reader asks, “I entered into an electronic direct withdrawal from my checking account repayment plan with with IRS for tax underpayment…after meeting with IRS, payment agreement request was approved. After the agreement was approved IRS filed a lien on the owed amount. I am not currently not a property owner, but I would like to buy a home in the next year.” “However the tax lien caused my credit score to drop to 649. I currently earn $92,000.00 from retirement income, and $40,000.00 from employment income. debt ration is where it should be. My question is can I ever qualify for FHA home loan, if the lien is not paid? Or (does) the lien (have) to be paid in full, along with a paid document submitted to all credit | more...

July 25, 2016

FHA Loan Questions: Credit Scores and Down Payments

By Joe Wallace

We get many questions about FHA loan standards for FICO scores and similar issues. Here’s one of the latest: “I am looking to purchase a mobile home for 25000. I have a 610 credit score and a stable job (been there for 8 years). I want to put down 40% of the loan. Do you think I would have any major issues even with a low credit score?” Questions like these are a good reminded that plenty of misconceptions about the home loan process exist. Unfortunately one of the prevailing misconceptions is that FICO scores are THE determining factor in home loan approval. That is not to dismiss the importance of FICO scores. Lender standards require a borrower to have a minimum FICO score (often between 620 and 640 depending | more...

July 21, 2016

More About FHA Loans For Home With PACE Assessments

By Joe Wallace

Recently we wrote a blog post about FHA plans to allow qualifying homes with PACE assessments to be purchased with FHA mortgages. The FHA announced this recently in order to help promote energy efficiency (PACE stands for Property Assessed Clean Energy and may be assessed in a manner similar to property taxes.) The FHA issued a mortgagee letter explaining how and why a property with a PACE assessment may be eligible for an FHA mortgage. Past issues with PACE include being considered a “first lien” on the property. FHA loan rules explain how new guidelines can permit a home with PACE to be purchased with an FHA mortgage: “Properties which will remain encumbered with a PACE obligation may be eligible for FHA-insured mortgage financing, provided that the mortgagee determines that | more...

July 15, 2016

Mortgage Rate Trends: Rising

By Joe Wallace

Mortgage loan rates have been on the rise most of the week; three out of four business days were marked by higher numbers or closing costs and with Brexit, overseas terrorism headlines, and domestic scheduled economic data releases, it’s possible we’re going to see rates creeping up over the short term next week much the way we did this week. At the time of this writing, 30-year fixed rate conventional mortgages are, best execution, reported at or near 3.375%, up this week from the previous week’s range bottoming out at 3.25%. FHA mortgage loan rates are currently holding in their 3.25% comfort zone. How long can they persist at or near these levels? Next week will be interesting to watch. (As always, best execution rates listed here assume ideal conditions; | more...

July 14, 2016

FHA Loans and Bankruptcy

By Joe Wallace

A Few Words About Bankruptcy from FHA.com on Vimeo. Some borrowers want to know how credit issues such as foreclosure, Chapter 7 bankruptcy, and Chapter 13 bankruptcy can affect their ability to get an FHA mortgage loan or refinance loan. While those who have been through such proceedings may have a better understanding of what happens to your credit, many who are facing the option of filing bankruptcy, going into loan default and foreclosure, or even doing a deed-in-lieu of foreclosure may not understand what’s at stake. The video above explains some basics about bankruptcy. But how does bankruptcy in particular affect your ability to get an FHA loan? Like foreclosure and deed-in-lieu, filing bankruptcy usually requires a mandatory “seasoning period” or waiting time between the bankruptcy and the new | more...

July 14, 2016

FHA Loan Questions: Refinancing After Foreclosure

By Joe Wallace

A reader asked us recently, “Is it true that I have to wait to refinance my FHA mortgage after having had a foreclosure on another property I own?” FHA loan rules regarding new loans in the wake of a foreclosure are found in HUD 4000.1, page 247 which states: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number assignment. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the foreclosing Entity/designee.” FHA loan rules do provide certain exceptions. “The Mortgagee may grant an exception to the three-year requirement if the foreclosure was the | more...

July 8, 2016

FHA Loans Versus Conventional Loans

By Joe Wallace

Here’s the Scoop on Conventional Loans from FHA.com on Vimeo. What are the differences between FHA home loans and conventional loans? There are several, some features of mortgage loans can vary depending on the lender, and state law may also affect how your home loan is handled depending on circumstances, but there are a few very important general differences to keep in mind when comparing FHA loans to conventional loans. The first difference is the basic nature of the loan itself. Conventional loans are not backed by the government, unlike FHA home loans where the FHA guarantees a portion of the loan to make it more attractive to the lender to issue credit. In the event that a borrower defaults on an FHA loan, the lender and the FHA have | more...

July 5, 2016

FHA Loans For Military Members

By Joe Wallace

There are a variety of reasons why a military member would consider buying a home with an FHA mortgage, including the desire to own a home instead of renting in a crowded military rental market. While it’s true that VA home loans are available for military members as part of their benefits, some may choose the FHA option instead. What should a military member know about FHA mortgages and refinance loans? The first thing some borrowers need to know is that, yes, it is possible to refinance a VA mortgage into an FHA mortgage loan. FHA refinance loans permit the refinancing of non-FHA mortgages for cash-out refinancing and “non-streamline” refinance options. You do not have to use your existing lender to refinance into an FHA mortgage, instead a borrower is | more...

June 23, 2016

FHA Loan Questions: Self Employment

By Joe Wallace

A reader asks, “I am working on getting an FHA loan and my lender asks that I provide W2s. I am self employed via my own business as well as had a regular job how will this affect my loan being that i have no W2 and that my taxes were done via 1099 and 1040 forms for myself and my business?” In cases like these, the lender will require whatever tax documentation that is available to show proof of income. For self employed borrowers, the lender may also require additional documentation such as profit and loss statements, business plans, and other items that may be required. Lender standards will apply so FHA loan rules and minimums are only part of the equation. FHA loan rules in HUD 4000.1 do | more...