Articles Tagged With: FHA Loan Rules

October 30, 2013

FHA Loans, Verifiable Income, and VA Benefits

Some veterans and currently serving military members may choose to pursue an FHA home loan instead of a VA mortgage for any number of reasons. If a borrower is eligible for VA benefits, can he or she count those benefits as income for the purposes of qualifying for an FHA insured mortgage loan? According to the FHA loan rulebook, military pay and some benefits may be counted as verifiable income as long as it meets the right criteria. Chapter Four of HUD 4155.1 says, “Military personnel receive base pay, and are often entitled to additional forms of pay, such as • variable housing allowances • clothing allowances • flight or hazard pay • rations, and • proficiency pay. These types of additional pay are acceptable when analyzing a borrower’s income | more...

October 25, 2013

FHA Loan Applications: What Borrowers Need To Have Ready

By Joe Wallace

When you’re getting ready to fill out an FHA loan application, knowing in advance what documentation you’ll need to get the process moving forward can be a big help. There are individual lender requirements that you’ll need to get directly from your loan officer, but the FHA loan rulebook (HUD 4155.1) lists some things the FHA requires as part of the process the lender uses to verify your employment, income, and credit data. The list of documentation includes (but may not be limited to) the following list found HUD 4155.1 Chapter One Section B: general mortgage credit analysis documents evidence of Social Security Number verification of deposit verification of employment (VOE) alternative employment documentation appraisal documentation. FHA loan rules in Chapter One say, “Lenders must obtain the most recent documents | more...

October 24, 2013

FHA Updates Guidance For Superstorm Sandy Repairs Under 203(k) Loan Program

By Joe Wallace

Just as the government shutdown crisis was unfolding, the FHA was preparing an update to policies that affect borrowers who need to apply for FHA 203(k) mortgages as part of their recovery from Super Storm Sandy. Unfortunately, that press release likely got overlooked by many because of the government shutdown issue. That update, as described in FHA Mortgagee Letter 2013-36, titled, “Eligible Properties in Presidentially Declared Major Disaster Area Super Storm Sandy for 203(k) insured mortgages” describes some very important updates. These updates specifically pertain to those seeking FHA 203(k) loans in areas affected by Sandy–they do not apply to other borrowers outside this area. According to the mortgagee letter, “Handbook 4240.4 Section 1-4 currently states that, homes that have been demolished, or will be razed as part of the | more...

October 22, 2013

FHA Loans After Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “What is the length of time after filing bankruptcy that you have to wait to qualify for a FHA loan…during that waiting process, what are some of the things that I should be doing to make the approval process easier and making my credit better?” FHA loan rules and lender standards are both considerations in situations like these, as is the specific circumstances of the individual’s bankruptcy and other credit issues. Borrowers should know that FHA minimums are just that–minimums. Lenders can and often do require higher standards. That’s why it’s important to consider shopping around for a lender who may be more willing to work with you–one lender may not be able to help, while another can, depending on your situation. For the record, FHA loan | more...

October 17, 2013

Government Shutdown Ends, FHA Loans Continue

By Joe Wallace

The government shutdown is over, following votes in the House and the Senate on Wednesday and a signature by the President immediately following. But one thing overlooked by some during the shutdown crisis–FHA home loans did continue as normal during the crisis, even if some borrowers who needed IRS confirmation of certain tax documentation did experience some inconvenience while that issue was being sorted out. The IRS was a casualty of the shutdown, with only a small percentage of its work force available for duty under the partial shutdown. In other sectors, government buildings sometimes closed to the public but kept operating for behind-the-scenes work. But overall, FHA loans kept moving forward during the entire length of the shutdown. The reason we write about that here is because while the | more...

October 9, 2013

FHA Loan Reader Questions: Do I Qualify For an FHA Mortgage With “Confusing Circumstances”?

By Joe Wallace

A reader asks, “I am formerly self employed with little if any income and own a home purchased prior to marriage and I have a 700+ FICO and perfect debt payment history. My husband is formerly self employed (5 years) and for 6 months now has been re-employed with former employer which laid him off during economic down turn. Husband has little or no credit history. With his rehire we will have to transfer. I don’t know if we can qualify for a home with the rather confusing circumstances. I don’t want to access my credit to find out we don’t qualify. What are our options?” The simplest, most direct answer to this type of reader question is “Call the FHA”. In situations like these, it’s a very good idea | more...

October 7, 2013

FHA Loans For More Than One Home: A Reader Question

By Joe Wallace

A reader asks, “I have recently split up with my girlfriend of 16 years we have never been legally married. She is not willing to refi to get my name off the house. I have not lived in the house for over a year and need to get another FHA loan on a house I am having built. I qualify financially. Is it possible for me to get another FHA loan since I no longer live in the house and the co-borrower does?” FHA loan rules discuss the guidelines for having more than one FHA loan in HUD 4155.1 Chapter Four Section B. That section says of this particular circumstance, “A borrower may be eligible for another FHA-insured mortgage if he/she is vacating a residence that will remain occupied by | more...

October 3, 2013

FHA Loan Interest Rate Locks

By Joe Wallace

In recent weeks, we’ve seen a steady drop in mortgage loan interest rates, with VA and FHA mortgage loan rates going as low as 4.0% in some cases (though that rate is not available from every lender or to every borrower). FHA mortgage loan rates tend to be lower than conventional loan rates in terms of the “ideal rate” for well qualified borrowers with very good FICO scores and credit repayment history. But even for borrowers who don’t have spotless credit, the recent mortgage loan rate recovery has offered some applicants a better deal than they could have gotten a few months ago when interest rates were climbing steadily over a period of weeks. One question some borrowers have about period like these when rates are higher in some months | more...

October 3, 2013

FHA Commissioner Addresses Confusion Over FHA Loans During Government Shutdown

By Joe Wallace

FHA Commissioner Carol Galante issued a statement clarifying some confusion over the FHA’s ability to process new single-family FHA home loan applications during the government shutdown. According to a variety of sources including CNN.com and American Banker, earlier reports from the FHA mistakenly announced the agency would not issue new loans if the government shut down. Galante issued a statement to clear up the issue, saying, “The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown’s impact on the FHA single-family loan program,” HUD said in a statement. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans.” The original shutdown plan had mistakenly announced, “FHA will be | more...

September 30, 2013

FHA Loan Modification Trial Payment Plans-What If The Borrower Fails?

By Joe Wallace

Recently the FHA changed some of its policies related to loss mitigation and foreclosure avoidance on FHA guaranteed home loans. In our last look at these changes, we examine what the latest guidance from the FHA and HUD has to say about borrowers in financial difficulty who cannot or do not successfully navigate a Trial Payment Plan. Borrowers and lenders are advised in Mortgagee Letter 13-32, “If a mortgagor fails to successfully complete a Trial Payment Plan under a Loan Modification or FHA-HAMP, pursuant to 24 C.F.R. § 203.355, mortgagees must still re-evaluate the mortgagor’s eligibility for other appropriate Loss Mitigation Options. If the mortgagor’s circumstances have not changed, the mortgagee must evaluate the mortgagor for FHA Loss Mitigation Home Disposition Options prior to initiating foreclosure.” While the Trial Payment | more...