Articles Tagged With: FHA Loan Rules

February 17, 2017

Gaps In Employment, Reductions of Income: FHA Loan Rules

FHA loan rules in HUD 4000.1 for single family home loans and refinance loans include instructions for the lender on how to verify a borrower’s income and employment. There are several reasons why this verification must be made, but one important one is to insure the income used to qualify for an FHA loan is stable, reliable, and likely to continue. The lender is basically looking for indications that this is so, but how does the loan officer interpret financial setbacks such as gaps in employment or reductions of income? What are the FHA requirements in this area? HUD 4000.1 addresses these issues. For example, when it comes to certain gaps in a borrower’s employment history, the following may apply: “For Borrowers with gaps in employment of six months or | more...

February 16, 2017

Mortgage Rates: Five Days Of Moving Higher

By Joe Wallace

Mortgage rates have been moving steadily higher for the last five business days; the most recent move higher on Wednesday was motivated in part by investor reaction to stronger economic data including a stronger Retail Sales report and better news associated with inflation stats. This data was part of scheduled economic data releases due out this week, and mortgage rates moved higher as they are often wont to do when there is good economic news. The move higher puts fixed rate conventional mortgage loan rates in a range with 4.375% best execution at the upper end-our sources indicate that more lenders are offering rates at or near the higher end. But the real news involves a change in FHA mortgage loan best execution rates-these numbers have been slower to change | more...

February 14, 2017

FHA Loans And Work Permits: A Reader Question

By Joe Wallace

Are work permits required for FHA loans when the applicant is a legal permanent resident alien or non-permanent resident alien? A reader asks, “So if a person had a work permit but never renewed it, but has been doing taxes with his/her ss# and is currently working does that mean there not qualify for FHA? Or does the legal status have to be current?” FHA loan rules in HUD 4000.1 are clear that a borrower is not required to be a U.S. citizen in order to qualify for an FHA mortgage loan. However, legal status is required-those in the United States illegally cannot qualify for an FHA loan. For permanent resident aliens, HUD 4000.1 states: “A Borrower with lawful permanent resident alien status may be eligible for FHA-insured financing provided | more...

February 7, 2017

Mortgage Loan Interest Rate Trends: Two-Week Lows

By Joe Wallace

Mortgage rates took a move lower on Monday to levels many have been hoping to see more of in the last two weeks. Though the move does not dramatically change mortgage loan interest rate numbers, could we be on the start of a short-term trend due to global economic uncertainty? Some of our sources seem to think that at the very least, today’s downward movement was inspired by investors seeking safer havens, with mortgage rates reaping the benefit of their investment activity. 30-year fixed rate conventional mortgages are now reported in a best-execution range between 4.125% and 4.25%. Affected borrowers may notice the changes reflected in closing costs rather than an actual rate adjustment. FHA mortgage rates continue in their best execution comfort zone at 3.75%. FHA rates often take | more...

February 3, 2017

Non-Occupying Co-Borrowers: A Reader Question

By Bruce Reichstein

FHA loan rules state that in cases where there are non-occupying co-borrowers, different down payment requirements may apply. According to FHA loan rules, “A Non-Occupying Borrower Transaction refers to a transaction involving two or more Borrowers in which one or more of the Borrower(s) will not occupy the Property as their Principal Residence.” A reader got in touch recently to ask a question about the FHA loan down payment requirement in situations that feature non-occupying co-borrowers. “I see below under 4155.1 (page 78 of 413) that unrelated individuals that can document evidence of a longstanding, substantial family type relationship would qualify for maximum financing. So since a cousin is classified as unrelated yet they’ve know each other since birth and have been living as family since then would then qualify | more...

February 2, 2017

FHA Mortgage Facts You Should Know

By Joe Wallace

FHA mortgage loans are a very good option for borrowers looking for a lower down payment and less stringent credit requirements than conventional mortgages. Did you know that FHA home loans do not feature a minimum or maximum income requirement? A borrower’s ability to qualify for an FHA mortgage depends on FICO scores, debt-to-income ratios, credit history, and other factors but there’s no “qualifying dollar amount” for income in terms of minimums OR maximums. Some believe that FHA mortgages are only for first time home buyers, the economically disadvantaged, or only for typical suburban homes. But FHA home loans are available to anyone who is financially qualified and wants to use the property to be purchased as their primary residence. FHA mortgages require only a 3.5% down payment in typical | more...

What You Need To Know About Your FHA Home Loan

February 1, 2017

FHA Loan Rules: Who Can Sell You The Home?

By Joe Wallace

FHA requirements and FHA loan rules are designed to protect the lender in some cases, the borrower in others, and sometimes both at the same time. The FHA appraisal process, for example, is designed to insure that the home will be viable for the entire lifetime of the mortgage. That protects the bank’s investment and the borrower’s ability to refinance or sell the property later. One set of FHA loan rules that seems to a have a definite consumer-friendly intent has to do with who is eligible to sell you the home you want to buy with an FHA loan. HUD 4000.1, the FHA single family home loan rule book, has a section that outlines basic requirements for FHA mortgages. Those requirements include controls on who may sell you the | more...

January 30, 2017

FHA Appraisals and Inspections: A Reader Question

By Joe Wallace

FHA appraisals are NOT the same as home inspections. This week we received a question about the appraisal process that serves as a reminder of this. A reader asks: “I purchased a home that was funded by FHA but the foundation is in significant disrepair it. There are whole sections where the beams are not being supported by anything therefore the beams will eventually not be able to sustain the floor. Approximately 30 Jacks or posts need to be added, addition to a few beams, most significantly in one 8 X 31-foot section of the house where there is nothing supporting it other than the outside foundation wall on one side.” “Basically it needs $35.000+ of work. The FHA guideline says that a structure has to be in good repair | more...

Will My Home Loan Application Be Approved?

January 27, 2017

Identity of Interest Transactions: An FHA Loan Question

By Joe Wallace

Do you know how FHA loan rules affect the sale of a home deemed an “identity of interest” transaction? A reader asks, “My husband and I have a contract to purchase his parents home that they currently live in. This is their principal residence.” “My loan officer is telling me that even though it is their principal residence and we are purchasing as our principal residence that the 85% LTV cannot be exceeded and we have to put 15% down. Is this correct?? If not, then what can I do to get them to make the exception? We were already pre-approved for 3.5% down.” FHA loan rules governing identity-of-interest transactions do feature a higher down payment requirement in many cases. HUD 4000.1 defines such transactions as follows: “An Identity-of-Interest Transaction | more...

Can I get an FHA home loan if I owe back taxes?

January 26, 2017

FHA Loans and Credit Report Issues

By Joe Wallace

FHA home loans offer an alternative to the more strict requirements of conventional mortgages. FHA loans typically feature a lower down payment requirement than many conventional loans, and have more forgiving credit standards (though lender standards will still apply). Some apply for an FHA mortgage unsure of how their past credit activity or even their current FICO score might affect their chances at loan approval. If you are one of those people, there are some things you can do for greater peace of mind going into the loan process. The catch is that advance planning is required-it’s best to start preparing for a major financial commitment like a mortgage a full year or more before applying. The planning time is crucial since you will need to save up money for | more...