Articles Tagged With: FHA Loan Rules

December 26, 2022

What Are The FHA Loan Rules For Investment Properties?

FHA home loans have “approved property” rules found in HUD 4000.1, the FHA loan handbook for Single Family Mortgage loan transactions. These rules include a list of approved uses for FHA mortgages, approved property types, and the kinds of property which can never be purchased with an FHA single-family mortgage. First and foremost, FHA loans are intended for owner-occupiers, which means that FHA mortgages for vacation homes and other intermittent-occupancy purposes are not possible. Borrowers cannot use an FHA loan to open a bed and breakfast or to purchase a timeshare, condohotel or similar property. FHA mortgage loan rules in HUD 4000.1 also state the following, intended to prevent the use of single-family home loans for business purposes: “FHA will not insure more than one Property as a Principal Residence | more...

December 21, 2022

New Mortgage Rules And Your FHA Home Loan

By Joe Wallace

The Consumer Financial Protection Bureau (CFPB) has weighed in on certain mortgage lending practices with an eye on reform; in 2022 it moved to require lenders to enhance loan approval policies related to a type of mortgage known as bank statement lending. These are loans include rules that allow the lender to review the borrower’s bank statements as a source of income for the borrower. Bank statement mortgage loans are, according to the publication National Mortgage News, offered to about 100 thousand borrowers per year, worth up to $25 billion in loans. In October of 2022, CFPB revised its regulations for these mortgages. Lenders are now required by the CFPB to confirm the data on bank statements used to verify income. Specifically, the lender is required to determine that the | more...

December 19, 2022

FHA Adds HECM Relief For Those Financially Affected By COVID

By Joe Wallace

Some homeowners might be surprised to learn about new financial relief for the financial effects of COVID-19, but the FHA and HUD made an announcement in the last month of 2022 — there are new options for those who struggle financially due to COVID. Specifically, there are new options for relief for qualifying senior citizens trying to keep their homes while struggling to make property tax payments on homes securing Home Equity Conversion Mortgage (HECM) loan payments. The issue for these homeowners? One requirement of the FHA HECM program is that the borrower stay current on all so-called property charges such as property taxes and homeowner’s association dues where applicable. In ordinary circumstances, if an FHA HECM borrower does not stay current on these charges, they face loss of the | more...

December 14, 2022

Why Was My FHA Loan Application Denied In 2022?

By Joe Wallace

Are you in the process of getting ready for a home loan? There are plenty of home loan industry trends to pay attention to when you are in the planning stages of buying a home with an FHA mortgage. Among them are mortgage interest rates, home sale prices, and then there are the costs associated with the loan such as appraisals and title searches. Many industry players observe these trends. One of them is the Consumer Financial Protection Bureau (CFPB), which examines a variety of issues related to buying and owning a home on behalf of consumers. CFPB Reviews Mortgage Data In 2022 CFPB has published observations about the first and second quarters of 2022. Among those observations? The causes of home loan application denial during those periods. What were | more...

December 12, 2022

Housing Market And Home Equity: What You Need To Know In 2023

By Joe Wallace

The mortgage industry has been coming down from the highs of summer, 2022. Fed actions to raise interest rates had an effect on the housing market (indirectly–the Fed sets the rates on federal loan funds, not mortgage loan interest rates) and as a result, conditions have started to cool to the point where mortgage rates actually dropped in December. Slowing Demand As the housing market cools, a course correction for home equity is an important factor to think about. According to certain mortgage industry sources, there are plenty of indicators that home equity is indeed starting to come back down. Lower demand and lower prices can translate into lower equity. Consider what the publication Mortgage Industry News printed about a report by CoreLogic in 2022: By the end of the | more...

December 9, 2022

HUD Announces Energy-Efficient Initiatives

By Bruce Reichstein

The Department of Housing and Urban Development has announced a climate forward green housing initiatives as part of an update to the HUD program known as the Rate Reduction Initiative, or RRI. RRI supports the HUD Climate Action Plan. That plan was created to foster “climate resiliency, reduce greenhouse emissions, and pursue environmental justice in housing” according to HUD.gov. RRI relies on partnerships with public housing providers, with one stated goal (among many) of encouraging the reduction of public housing utility costs beyond what may already be required by state law, saving money, and helping the environment at the same time. The RRI plan encourages public housing agencies to negotiate special rates with utility companies, or purchase energy through a third-party broker. It also encourages arrangements between utility companies and | more...

December 7, 2022

Mandatory or Optional? FHA Home Loan Issues

By Joe Wallace

What is mandatory and what is optional when you apply for an FHA home loan? You will find a lot of advice on the internet about buying a home. You can haggle over the home sale price, for example, and negotiate things like seller concessions. But what about the not-so-obvious details? What is required and what is not? Mortgage insurance on your FHA mortgage, for example, is mandatory. To a point. All FHA forward mortgages (also known as purchase loans) require you to pay for mortgage insurance on your FHA home loan each month. That said, it may not be mandatory for the full duration of the mortgage. That may depend on how much you put down and the term of the loan you may have the option to cancel | more...

December 2, 2022

Higher FHA Loan Limits For 2023

By Bruce Reichstein

On Thursday, December 1, 2022, the Federal Housing Administration published the new FHA loan limits for 2023. There are higher loan limits for FHA forward mortgages in 2023 and also higher limits for FHA Home Equity Conversion Mortgages. Most of the country gets this loan limit increase in 2023. The higher limits come thanks to house price appreciation during the first half of 2022. Such home price changes are typically included as part of the calculations FHA makes to set the limits” each new year. A press release at HUD.gov notes these limits, “reflect steep increases in home prices throughout much of the country” according to Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon, who was quoted in the press release. Commissioner Gordon adds the higher limits, “…will | more...

November 30, 2022

Budgeting For Your Home Inspection, Appraisal, and Compliance Inspection

By Joe Wallace

When you plan to buy a home with an FHA loan you should be thinking about how much you will need to save for expenses paid upfront, such as appraisals and inspections. You may not, as a first-time home buyer, have the experience to anticipate all expenses you need to pay in the coming months. But there are typical costs you can plan and save for. Home Inspection Costs Did you know there’s no fixed price for home inspections? There are no national cost guidelines or restrictions for this service; home inspection costs will vary based on the housing market and inspections are paid for by the borrower independently of the rest of the home loan process. Home inspections may cost somewhere between $300 and $500 depending on location. Your | more...

November 23, 2022

FHA Loan Program Rule Changes: Flood Insurance Coverage

By Joe Wallace

Some borrowers want to buy homes in the desert, some want to buy homes that are located in areas prone to flooding. But not all flood zones are the same; some feature an elevated risk of flooding and if you buy a home with an FHA loan in certain flood zone hazard areas you are typically required to carry special flood insurance. But new changes to the FHA home loan program make it possible for homeowners to seek private flood insurance instead of the one FHA-approved option previously available. Prior to the new rule the only insurance option possible was through the National Flood Insurance Program. In the final quarter of 2022, the Department of Housing and Urban Development announced that starting in December the FHA loan program allows homeowners | more...