Articles Tagged With: FHA Loan Rules

March 23, 2017

FHA Loans After A Deed-In-Lieu

How long does a borrower have to wait to apply for a new FHA mortgage following a deed-in-lieu? A reader asks us a question along those lines this week: “We went Chapter 13 about 8 years ago and paid the CH 13 off through the repayment plan. We also relinquished our home with a DIL of foreclosure. The house sat on the market for 7 years and finally sold last July. Three different banks have told us that we are not eligible yet to buy another home because we have to wait 2-3 years (depending on who we asked) after the home was transferred out of our name to the new owner. Please help!! How many years do we have to wait? Is it 2 or 3? Thank you!” FHA | more...

March 21, 2017

FHA Home Loans and Zoning: A Reader Question

By Joe Wallace

How are FHA home loans affected by zoning laws? A reader asked a question about this in our comments section recently: “I have a family who wants to purchase a home on commercial zoned property. The County has given a letter stating that they would allow the rebuilding of the residence as long as less than 75% was damaged in a disaster. The lenders are refusing to allow an FHA residential loan for the property. It is clearly residential use in commercial zoning. Whey would they refuse to abide by the rules you state?” This question is in reference to a 2011 blog post titled, “Can I Get An FHA Loan For A Commercial Property?” The FHA loan rules quoted in that post have since been superseded in their entirety | more...

Can I buy a manufactured home with an FHA loan?

March 20, 2017

FHA Loan Rules For Employment: A Reader Question

By Joe Wallace

FHA loan rules require the lender to verify a borrower’s employment-how long the borrower has been employed, the nature and duration of the job, the pay, and other factors that may be required by lender standards or state law. Sometimes it is easy to misunderstand these requirements, but many simply don’t know what the lender is looking for when verifying a borrower for an FHA mortgage loan. One reader got in touch with us to learn what the FHA loan rules are for employment, asking, “What is the required period of employment for FHA?” HUD 4000.1 provides the answer, stating: “For all Employment related Income, the Mortgagee must verify the Borrowers most recent two years of employment and income, and document using one of the following methods” which include “traditional” | more...

March 13, 2017

FHA Loans and Septic Distances

By Joe Wallace

What are the FHA loan guidelines for septic tank issues? A reader asked us a question in this area in the comments section recently: “I am in contract to buy a home with a FHA 203 rehab loan. Today I had building and septic inspections and I found the septic was actually located on the neighbors property. The neighbor doesnt care and is very willing to work with me on it. Does this disqualify the loan?” There are several factors at work for FHA loan approval, not just FHA loan minimum standards. State law, building code, health department requirements and other regulations may affect whether corrections are required as a condition of loan approval. So it’s very important to understand that FHA loan rules may be silent in areas where | more...

March 9, 2017

FHA Mortgage Questions And Answers

By Joe Wallace

There are many questions about FHA loans-those who are new to the process want to know some very basic, but very important things including how down payments are calculated, who is eligible for an FHA loan, and whether the borrower is free to sell the home purchased with an FHA mortgage after buying it, and how soon. Let’s explore some of these questions: Am I Eligible For An FHA Loan? The implication with a question like this sometimes includes another question. “Do I make too much money to qualify?” This is due to a misconception that FHA mortgages are intended only for first-time buyers, the economically disadvantaged, or those who have earnings that fall within a certain range. But the truth is, FHA mortgage loans have no income limits and | more...

How much can I borrow with an FHA refinance loan?

March 2, 2017

FHA Loan FICO Score Rules

By Joe Wallace

What are the FHA loan program’s FICO score requirements? That’s a common question, and a good one to ask as there are several things to keep in mind about how the FHA and participating lenders will view your credit scores. FHA loan rules say that borrowers with FICO scores between 500 and 579 are technically eligible for FHA mortgages (more on that in a moment) but a higher down payment (10%) is required. For borrowers with FICO scores of 580 or higher on their credit report, maximum financing is allowed with a required down payment of only 3.5%. These are simply FHA loan program minimum standards. Your lender may require higher FICO scores, and typically scores in the mid-600s tend to have a better chance to qualify for loan approval. | more...

February 28, 2017

FHA Well Water Requirements: A Reader Question

By Joe Wallace

What do FHA appraisal requirements have to say about the testing of well water? A reader got in touch with us recently to ask us about well water testing: “Is there an automatic testing of the well required just because it is surrounded by extensive farm land? I know that is required for USDA but wasnt aware that FHA required it. A reviewer is telling me it is in the 4000.1 Handbook and I dont remember seeing that.” The answer to this particular question is addressed in HUD 4000.1 on page 495, but before we get to the specifics, it’s important to point out that FHA loan standards are often not the only ones that must be met in situations like these. The local health authority may require testing of | more...

February 27, 2017

Types of Homes Eligible For FHA Mortgages

By Bruce Reichstein

What kinds of property types can be purchased with an FHA mortgage loan? It’s a simple question, but there are some occasional misconceptions about FHA requirements for single family homes that borrowers should know about as they plan their mortgage. There are rules on eligible property types that can be purchased with an FHA mortgage loan. These rules are found in HUD 4000.1, and include the following guidance to the participating FHA lender: “FHAs programs differ from one another primarily in terms of what types of Properties and financing are eligible. Except as otherwise stated in this SF Handbook, FHAs Single Family programs are limited to one- to four-family Properties that are owner-occupied Principal Residences.” The phrase, “owner-occupied principal residences” is an important one-FHA mortgage loan rules include an occupancy | more...

February 23, 2017

FHA Loan Employment Rules: A Reader Question

By Joe Wallace

A reader asked us a question in the comments section recently about FHA loan rules for employment verification. “I just got denied a FHA loan because I had a gap in employment for only 3 months. I wanted to know does having a gap for only 3 months qualify me for getting denied?” It’s important to remember that FHA loan standards found in HUD 4000.1 (the FHA single family loan rule book) are not the only standards that are recognized or enforced when the lender is processing a home loan application. FHA loan rules, state law, lender standards, and even things that are considered “customary” in the local housing market may all play a part in FHA loan approval and processing. So what’s found in HUD 4000.1 is a good | more...

When Is An FHA Loan Better Than A Conventional Loan?

February 22, 2017

Divorce And FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “I was divorced 5 years ago but he stayed in the house. He is always behind on the payments and it affects my credit. I have divorce papers that state he is solely responsible for the house and payment. Also he was court ordered to get the house in his name but hasnt and the courts wont do anything about it but extend his time. Can I buy a house even though because of his late payments has made my credit score less than 500. How do I handle this?” This reader question should be answered by legal counsel-giving legal advice is outside the scope of this blog, except to recommend that when legal help is needed that it’s best to get the services of someone with | more...