Articles Tagged With: FHA Loan Rules

December 5, 2017

FHA Loans And Charge-Off Accounts

Do you ever wonder about applying for an FHA Loan while having charge-off accounts in your credit history? Is it possible to get approved for an FHA home loan even though you have some negative credit information in your background? This is a question many ask, and the answer can be complicated depending on how old that negative credit data is, and whether or not it indicates an overall pattern of credit behavior. When you fill out an FHA loan application, your loan officer will need to examine your credit history, FICO scores, and other areas to determine your credit worthiness. Some borrowers come to the loan process with outstanding credit, others may have old issues or even currently disputed items on their credit reports that make them worry about | more...

December 4, 2017

FHA Home Loan Rules For Salary, Hourly, Part-Time Income

By Joe Wallace

Not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That’s why FHA home loan rules in HUD 4000.1, the FHA single family home loan handbook, include different instructions to the lender for a diverse range of income sources. FHA Loan Rules For “Primary Income” HUD 4000.1 has sections for 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” and defines it as follows: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” “Current Pay” Versus “Projected Pay” According to HUD 4000.1, FHA loan | more...

November 27, 2017

FHA Loan Rules: Using Rental Income to Qualify for a Mortgage Loan

By Bruce Reichstein

What do FHA loan rules say about using rental income to qualify for an FHA home loan? Is it possible to use rental income according to the FHA loan handbook, HUD 4000.1? The short answer is that it depends on whether or not the rental income meets FHA loan minimum standards. When processing your home loan application, your participating FHA lender will request copies (never originals) of the relevant paperwork associated with your employment and income, including tax documents, W2 forms, pay stubs, etc. If your income is derived in whole or in part by rent payments, the lender will need to see documentation for that, too. FHA loan rules in HUD 4000.1 address this on page 202, starting with the definition of what is considered rental income under the | more...

November 24, 2017

Late or Missed Payments and FHA Loan Applications

By Joe Wallace

Is it possible to get an FHA loan application approved with late or missed payments on your credit report? It’s easy to get caught up in a struggle with common financial problems, and some of the simplest situations (late and missed payments on financial obligations) can have the biggest impact on a borrower’s credit rating or perceptions of creditworthiness. Having a handful “lates” and/or missed payments in your recent credit history might not affect your overall financial bottom line IF you’re not planning to seek new lines of credit. But if you are planning to apply for a home loan in the 12 months following late or missed payments, this situation becomes far more important. FHA loan applications, like other major lines of credit, are affected by anything that changes | more...

November 24, 2017

FHA Loan Questions: What Constitutes Flipping?

By Bruce Reichstein

What constitutes flipping? It is a housing market practice generally discouraged by FHA loan rules found in HUD 4000.1, but what is flipping in the eyes of the FHA and HUD? According to the FHA loan handbook: “Property Flipping refers to the purchase and subsequent resale of a Property in a short period of time.” Also found in the FHA loan handbook, this further explanation of what the FHA considers to be property flipping: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value.” What is the basic FHA loan guideline for a transaction that could be identified as flipping? Situations where the home has been owned for 90 days or less. Some FHA loan rules in this | more...

November 17, 2017

How Much Is My FHA Home Loan Down Payment?

By Bruce Reichstein

What is my FHA home loan down payment? It’s an important question to ask as early as possible in the home loan planning process. You will need to save up for an FHA loan down payment and there are a few variables that will factor in when it comes time to calculate that down payment. Do you know what they are? FHA Home Loan Down Payments Are Not A Fixed Amount The dollar amount of the required FHA loan down payment is not standardized for all home loans. Borrowers should know that the down payment is calculated based on several factors including the adjusted value of the property, credit scores, and lender standards. FHA Home Loan Down Payments Have A Minimum Requirement The lowest down payment a borrower is legally | more...

November 3, 2017

Are There Any Employment Documentation Rules For FHA Loans?

By Bruce Reichstein

Are there any employment documentation rules for FHA loans? Borrowers are naturally curious about how the lender must verify employment, and that curiosity may turn to concern if the borrower isn’t confident that his or her job history is enough to qualify for the FHA loan minimum requirements. What do FHA loan rules tell the lender to do when it is time to confirm your employment for FHA loan purposes? How FHA Loan Employment Verification Works The lender is required to independently verify your employment, which means getting documentation that does not come from any “interested party” associated with the loan. You may give your lender the contact information for your employer, but you cannot provide the required information the loan officer needs to move forward with the loan application. | more...

October 17, 2017

How Can I Get Cash Back With An FHA Mortgage?

By Bruce Reichstein

How can I get cash back with an FHA loan? It’s a question many want to know, especially those who might be interested in applying for “more” FHA loan than is needed to complete the transaction. Is getting cash back at closing time possible with an FHA mortgage? The answer depends greatly on the type of transaction you seek. Some loans do not allow any cash back except for refunds, others are designed to offer money to the borrower at closing time depending on the terms of the loan and other factors. FHA New Purchase Home Loans If you are asking the cash back question about FHA forward mortgages (loans used to buy a home on the housing market as opposed to a refinance loan or an FHA reverse mortgage), | more...

October 9, 2017

FHA Mortgage Rules For Homes In A Flood Zone

By Bruce Reichstein

In a previous blog post we discussed some of the FHA loan rules for purchasing homes that may be located in flood zones. According to the FHA loan handbook, homes in certain types of flood zones or Special Flood Hazard Areas are not eligible for FHA mortgages (including but not limited to SFHA Zone A, a Special Flood Zone Area, or Zone V). But other properties may be eligible. FHA loan rules for homes that are in a flood zone but are still eligible for an FHA mortgage vary depending on the type of property. Let’s examine the rules for each: Proposed or New Construction Homes HUD 4000.1 says of these properties: “If any portion of the dwelling, related Structures or equipment essential to the value of the Property and | more...

September 28, 2017

Can I Get a Single Family FHA Loan For A Multi-Unit Home?

By Joe Wallace

Can I get an FHA single family loan for a multi-unit home? Some borrowers get confused by the wording in the name of the FHA Single Family Home Loan program. It’s easy to assume that FHA single family mortgages are for one-bedroom houses, but that is definitely not the case. FHA loans are approved for homes that feature as many as four living units-a four unit property can definitely be financed with an FHA loan assuming the borrower is qualified to be approved for the mortgage. One-to-four unit properties purchased with FHA mortgages must be the primary residence of the borrower-you must agree to occupy the home purchased with an FHA mortgage loan usually within approximately two months after loan closing (unless the borrower makes other arrangements with the lender | more...