Articles Tagged With: FHA Loan Rules

December 19, 2024

Bad Credit And FHA Home Loan Options

The term “bad credit” tends to feel a bit stigmatizing. Borrowers who have had past difficulty with credit have it hard enough trying to recover from the stigma of their previous credit issues without being confronted by those problems every time they want to start working on their credit. Is there such a thing as a bad credit FHA loan that can help people become homeowners and get a fresh start with credit? Technically the answer is, “it depends”, which isn’t very reassuring. But the truth of the matter is, there are FHA standards that technically make the concept of a bad credit mortgage a reality. After all, on paper FHA loan rules state that a borrower with FICO scores in the 500 range could still technically qualify for an | more...

December 4, 2024

Mistakes First-Time Homebuyers Make

By Joe Wallace

If you are a first-time homebuyer, there are some pitfalls and mistakes you should definitely try to avoid as you enter into the process of planning, saving, and applying for a loan to purchase a new home. If you are thinking of buying a new home in 2025 with higher FHA loan limits, consider the kinds of mistakes some new house hunters make before you commit. What kinds of mistakes do we mean? There is the usual Home Loans 101 type advice you read in every single finance blog ever written–don’t be careless with your credit, don’t apply for new credit while you are trying to apply for a home loan, and don’t start house hunting in earnest without home loan preapproval. But what about some of the less obvious | more...

November 27, 2024

FHA Home Loans And Your Downpayment

By Bruce Reichstein

There are good reasons to put more money down on a low-down-payment mortgage like an FHA home loan. There are also important reasons why someone might not be able to pay as much upfront on the home loan as they would like. What are the advantages and disadvantages of a larger downpayment? Are you looking to buy a new home in 2025? The biggest disadvantage for some is the basic financial outlay of cash. Financial circumstances don’t permit all buyers to pay a lot out of pocket for their home loans. In such cases, downpayment assistance programs offered by state or local agencies can help those who qualify. For those who can afford to pay more upfront? The most obvious, Home Loans 101-type advice is that a bigger downpayment lowers | more...

November 7, 2024

Will Your FHA Home Loan Be Approved?

By Joe Wallace

Will your FHA home loan be approved or denied? There are several reasons why your loan application could be turned down, and some of those reasons have more to do with the property than with the borrower’s credit history or FICO scores. And in some cases, getting turned down for a mortgage is the borrower’s fault due to credit history or FICO score issues. But what about when the borrower’s credit, employment, and other qualifying factors are acceptable to the lender, but the home loan application is turned down anyway? For some, it could be a question of the property’s condition, location, or type. Location Counts Some don’t realize at first that to be approved for an FHA residential home loan, the property cannot be situated within a specific range | more...

October 21, 2024

Are You Ready To Apply For An FHA Mortgage?

By Joe Wallace

How do you know you are ready to apply for an FHA home loan? And by that question, we mean sending the documents to the lender ready for the approval process. Being ready to submit your financial information and other documents for loan approval means having taken certain steps along the way in the planning and saving stages of your mortgage. To apply for an FHA home loan, you’ll want the following things in the list below, and keep in mind that these are needed before you send in your application: Making an offer on a home and having it accepted is the catalyst for getting the actual application paperwork into the system, but some borrowers pre-qualify for a loan before house hunting. That causes some confusion at times because | more...

October 18, 2024

When Can I Refinance An FHA Loan?

By Bruce Reichstein

When can I refinance an FHA loan? That is a common question and one that is addressed in the FHA loan handbook, HUD 4000.1. There are rules that govern how and when you can refinance your home loan and those rules will vary depending on the type of refinance loan you seek. Most FHA home loans, including refinance loans and even reverse mortgages, require occupancy as a condition of loan approval. In the case of FHA Cash-Out Refinance loans, occupancy is necessary for at least one year before the new loan. From HUD 4000.1: “Cash-out refinance transactions are only permitted on owner-occupied Principal Residences. The Property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence for the 12 months prior to the | more...

What You Should Know About FHA Home Loan Credit Checks As A First-Time Home Buyer

October 3, 2024

How Much Do I Put Down On An FHA Home Loan?

By Joe Wallace

There are persistent myths and misunderstandings about home loans. One persistent myth is that FHA mortgages are only approved for first-time home buyers. Another is that FHA loans are only for low to moderate-income borrowers. And a third–and the focus of our article–is that you have to make a 20% down payment on a home loan. What’s the reality? FHA home loans do NOT require a 20% down payment, even if you are at the lower end of the qualifying credit score range. According to FHA loan rules, the most you are required to put down on an FHA mortgage (on paper, according to the FHA) is 10%. That is for borrowers who do not have FICO scores that qualify them for 3.5% down. So why do people think you | more...

September 18, 2024

FHA Home Loans: How Much Will You Pay Per Month?

By Joe Wallace

How much house can you afford with an FHA loan? If you aren’t sure about the final amount of your monthly mortgage payment as a new house hunter, you aren’t alone. Fortunately, there are things you can do to get an estimate on how much to expect your monthly payments to be. Do The Right Math Don’t make the mistake of doing “the wrong math” for your FHA loan. You should not just use the home’s sale price and possible interest rate to make the calculation. Why? The results you get don’t include other costs you may have to pay each month, and your expectations will be skewed (most likely) to be too low in terms of the actual monthly financial commitment. Home Loan Math Variables The previously mentioned calculation | more...

September 10, 2024

Bankruptcy Versus FHA Loan Approval

By Joe Wallace

Declaring bankruptcy, either Chapter 7 or Chapter 13, impacts your credit standing. Though it might be a necessary financial step, it disrupts your normal financial activities, including getting a mortgage. But is declaring bankruptcy the end of your ability to buy a new home? Not necessarily. Thanks to “seasoning periods” a borrower waits out after bankruptcy to be declared fit to borrow to buy a home, bankruptcy doesn’t permanently bar you from buying a home. Before discussing the waiting periods for mortgage loans, let’s differentiate between Chapter 7 and Chapter 13 bankruptcies: Chapter 7 Bankruptcy This involves liquidating your non-exempt assets to pay off creditors. While it provides a quicker resolution, it can negatively affect your credit score for up to a decade. Chapter 13 Bankruptcy This allows those with | more...

July 31, 2024

Post-Disaster FHA Loan Options

By Joe Wallace

In 2024, the United States experienced a series of severe storms, floods, fires, and natural disasters, leading to devastation. But some affected regions, particularly in Maui County, Hawaii where wildfires caused significant damage, were damaged last year but still need federal help. In response, the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) extended disaster relief options originally implemented in 2023 for Maui County. These included the extension of the FHA’s foreclosure moratorium program and other forms of assistance in late summer 2024. And other homeowners across the nation may also be affected by their own federal disaster area. If you are a homeowner with damage to a home purchased with an FHA mortgage and live in a federal disaster area, the information below can | more...