Articles Tagged With: FHA Loan Rules

September 26, 2022

HUD Announces Fair Housing Case Settlement

Did you know that Fair Housing laws are designed to protect you once you start owning or renting a home and not just while you are house hunting? You might not realize that sexual harassment can be a violation of the Fair Housing Act if happens in the context of seeking or owning a home. Has someone sexually harassed you as the employee of a lender, property management company, realtor, or appraiser? If you have, you may have grounds for a complaint with the Department of Housing and Urban Development. One example of this comes thanks to a recent settlement between HUD and California apartment owners/property managers. HUD has announced a conciliation agreement with respodnents including Perris Family Apartments, LLC., Coachella Valley Housing Coalition, Hyder Property Management Professionals, and an | more...

September 23, 2022

FHA Loan Credit Issues To Think About

By Joe Wallace

Credit scores are a very important part of qualifying for an FHA mortgage, but they are not the only factor to pay attention to. What follows is information about the other credit-related factors your lender will consider. To be sure, these factors may affect your FICO scores, but they are also viewed apart from your scores to determine your ability to realistically afford your mortgage. What are these factors? On-Time Payments Your participating FHA lender will review your credit report to see if there are late or missed payments, how many, and when they occurred. In general–and this is advice you will read on any mortgage blog or bank official site–if you have late or missed payments in the last 12 months, it can hurt your ability to get a | more...

September 21, 2022

Article Update: FHA Loan Rules For “Identity Of Interest” Transactions

By Joe Wallace

Back in 2016, we published an article about the specific FHA loan rules that apply in situations where the owner of a rental property wants to sell to her renters. In such cases, it may be a situation where the borrower has been renting for some time and has an offer from the landlord to purchase. Back when we first published the article, we noted that FHA loans do permit these transactions but there are special rules that govern them. Have those rules been modified since we reviewed them last? The rules for these transactions are found in HUD 4000.1, the FHA Single-Family Lender’s Handbook. Today, those rules begin by explaining who is affected in these circumstances, which are described by HUD as “identity of interest transactions”. From HUD 4000.1: | more...

September 16, 2022

FHA Home Loans For Houses In Flood Zones

By Joe Wallace

In 2017, we wrote an article about the importance of knowing FHA loan rules for loan approval in certain regions of the country subject to flooding. Is it possible to purchase a home with an FHA mortgage in a flood zone? The FHA Loan Single-Family Lender’s Handbook, HUD 4000.1, says that homes in certain types of flood zones or Special Flood Hazard Areas or SFHA are not eligible for FHA mortgages. These areas include, but may not be limited to SFHA Zone A, a Special Flood Zone Area, or Zone V. We reported that in 2017 and we wanted to follow up to see what the rules say today. Proposed or New Construction Homes HUD 4000.1 says that in cases where “any portion” of a home is in an SFHA, the | more...

September 14, 2022

FHA Appraisal Rules For Systems In The Home

By Joe Wallace

In 2016, we published an article about FHA loan appraisal rules for certain systems in the home. FHA appraisals have rules governing the process including some that address specific systems in the home. Make no mistake: some FHA appraisal requirements depend on the local authority, while other requirements have specific guidance. Depending on the issue your experience may vary. As we noted in 2016, FHA appraisal rules are found in HUD 4000.1, which is the rule book for all FHA single-family mortgage loans, refinancing, and reverse mortgages. Where heating the home is concerned, FHA loan rules include the following: “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source.” The installed system must have | more...

September 7, 2022

Article Update: FHA Loan Rules On Late And Missed Payments

By Joe Wallace

Back in 2017, we published an article asking an important question. Is it possible to get an FHA loan application approved with late or missed payments on your credit report? Borrowers can get bogged down with financial difficulty in the best of times. In an economic environment that includes rising gas and utility costs, inflation, and employment woes this threat is greatly elevated. Back in 2017, we didn’t have the pandemic to worry about, but in more recent times this factor has severely complicated many people’s finances. If you get caught up in a struggle with common financial problems you may find some of the simplest situations–we are talking about late and missed payments on your recurring financial obligations–can have the biggest impact on a borrower’s credit rating or perceptions | more...

August 29, 2022

Article Update: Using Rental Income To Qualify For An FHA Home Loan

By Joe Wallace

In 2017, we published an article about FHA loan rules and whether it is possible to qualify for an FHA mortgage using rental income. Back then we cited FHA loan rules and regulations that stated it IS possible, but only if certain conditions are met. Part of the issue? Whether or not the rental income meets FHA loan rules in HUD 4000.1, the FHA Single Family Lender’s Handbook. If your income is derived in whole or in part by rent payments, the lender will need documentation to support that. Back in 2017, we reported FHA loan rules in HUD 4000.1 addressing the rental income issue starting on page 202. That section begins, “Rental Income refers to income received or to be received from the subject Property or other real estate | more...

When Is An FHA Loan Better Than A Conventional Loan?

August 26, 2022

FHA Loans And Community Property States

By Joe Wallace

One of the most common questions we are asked about FHA mortgages involves state community property laws, non-borrowing spouses, and their credit issues. Does an FHA loan applicant have to include a non-borrowing spouse’s financial data when applying for an FHA mortgage? It all depends on whether the state the borrower is living in has community property laws or not. In cases where such laws are present, the transaction may be affected. FHA loan rules on this topic are addressed in HUD 4000.1, starting on page 180. It begins with a definition: “Non-Borrowing Spouse Debt refers to debts owed by a spouse that are not owed by, or in the name of the Borrower.” In cases where a borrower lives in a community property state, where state law has a | more...

August 24, 2022

Article Update: FHA Loan Appraisal Rules For Central Heating and Air Conditioning Systems

By Bruce Reichstein

In 2017, we asked an important appraisal question. We asked, “What are the FHA loan appraisal rules for central heating and air conditioning systems? Does a house need to have central air/heating to be FHA approved?” There were two answers to this question back then and the same issues apply today. In HUD 4000.1, we learn the following about the appraisal requirements for heating systems and central air conditioning units, including the following requirement: “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source. FHA loan rules say the Appraiser must notify the Mortgagee of a deficiency if the permanently installed heating system does not: “Automatically heat the living areas of the house to | more...

August 22, 2022

Article Update: FHA Loan Rules For Different Income Types

By Joe Wallace

Back in 2017, we published an article examining the FHA loan rules for income. As we noted back then, not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That means a participating FHA lender must have rules that govern how/if certain types of income may be included for the purpose of determining a borrower’s monthly gross income. That information is needed to calculate the debt-to-income ratio your lender must have to help approve the loan. FHA Loan Rules For “Primary Employment” HUD 4000.1, the FHA Single-Family Lender’s Handbook, contains guidance for the lender to review hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” | more...