Articles Tagged With: FHA Loan Rules

January 25, 2017

Appraisal Questions: Bricks

A reader asked a question about the FHA appraisal process in our comments section recently; “I am currently selling my house. The buyer is getting a FHA loan.” “The appraiser asked us to repair any broken brick on the outside of the house. My husband scraped off the parts of the bricks falling apart and filled each hole with mortar and painted it as close to the brick as he could. Will this be an acceptable fix according to the appraiser?” When an FHA appraiser requires corrections as a condition of loan approval, borrowers will likely have to pay for an additional compliance inspection, which allows the appraiser to verify that the corrections were made to the satisfaction of FHA minimum standards. Whether or not a certain correction or repair | more...

January 12, 2017

FHA Loan Rules For Part-Time Income

By Bruce Reichstein

FHA loan rules require the lender to verify both employment and income. The lender must determine that a borrower’s income is both stable, and likely to continue for the purpose of making the mortgage loan payment. But what kinds of employment can a lender use to qualify the borrower? A reader got in touch with us recently to ask, “What if I have a 20 year old borrower that graduated HS in 2014. She has 2 jobs (receptionist at both). One shes had for 2 years 9 months and only works 15 hours a week and the second shes had for 1 year 4 months and puts in 20 hours a week. Will FHA accept both incomes as qualifying income?” FHA loan rules covering this issue are found in HUD | more...

January 11, 2017

FHA MIP Rates For 2017: Revised

By Joe Wallace

The FHA/HUD official site has announced changes to the FHA MIP fee structure for 2017. According to the latest FHA mortgagee letter, “FHA continuously strives to achieve the appropriate balance between meeting the housing needs of the borrowers that FHA’s mortgage insurance programs were created to serve, and also the requirement of minimizing the level of risk to the Mutual Mortgage Insurance Fund undertaken relative to the insurance of those mortgages.” “FHA has determined that the appropriate balance of its statutory operational goals now requires a reduction of the rate of annual MIP charged pursuant to Section 203(c)(2)(B) of the National Housing Act (NHA). As provided in this ML, the total annual MIP charged pursuant to NHA sections 203(c)(2)(B) and (C) for most Title II Single Family forward mortgages has | more...

January 11, 2017

Income Documentation: A Reader Question

By Joe Wallace

A reader got in touch with us this week to ask a question about the FHA requirements for income documentation: “I work on a commission basis where a large part of my income does not appear on my w2. Say I make 4,000.00 in commission my expense to do my job is 1,000.00 my employer will write a check to me for that amount and them deducts it from my 4000.00 commission and then I am taxed on the remaining 3,000.00.” “I am at the end of the loan process and the underwriter is requesting a letter of explanation from the employer and she will not respond. Does she have to legally comply and how long can she take?” Unfortunately this falls dangerously close to asking for legal advice, and | more...

January 10, 2017

FHA Appraisal Update: A Reader Question

By Joe Wallace

What’s the difference between an FHA appraisal update and ordering a second appraisal? That’s an important point when it comes to answering the reader question that came in via our comments section this week: “My question is this: Can a lender order a new appraisal on a property that has already been assigned an FHA case number (previous buyer offer fell thru)? Appraisal is less than 120 days old. Since the initial appraisal the seller has installed a new roof, WDO repairs and other minor repairs. Would this give the new lender a reason to order a new appraisal?” FHA loan rules in HUD 4000.1 make a distinction between an FHA appraisal update and a “second appraisal”. HUD 4000.1 says the following about a second lender ordering a new appraisal | more...

January 9, 2017

Mortgage Rate Trends: Lower Overall

By Joe Wallace

Since our last report we’ve seen a mortgage rate recovery of sorts, but it is still too early to label it on overall short-term downward trend. Last week rates moved lower in short-term ways that give some market watchers reason to use the term “correction” in their reports, but Friday’s Employment Situation Report did cause a bit of an upward turn for mortgage loan interest rates. The key to Friday’s move is that the changes weren’t terribly surprising to those paying close attention, and even with a modest readjustment, we’re still looking at numbers we haven’t really since since the election, as you’ll see below. 30-year fixed rate conventional mortgages moved as low as a best-execution 4.125%, but 4.25% is also available from some lenders, so we have a best | more...

January 6, 2017

Down Payment: FHA Loan Rules

By Joe Wallace

How much do you know about FHA loan down payment requirements? If you’re feeling in the dark about this as a new house hunter, don’t feel bad-we take plenty of reader questions in the comments section about FHA home loans, but from time to time we get them not just from home buyers or sellers, but also from loan officers and others in the industry. There was a reader question this week from an “industry person” about down payments and the FHA loan rules associated with them. We like to point out in times like these that we are not affiliated with the FHA, HUD, or any other government entity, but we do where and know how to find the answers to questions like the following: “What about two brothersone | more...

January 4, 2017

FHA Appraisal Rules: Zoning, Non-Residential Use

By Joe Wallace

The FHA Single Family Home Loan Rulebook, HUD 4000.1, includes instructions regarding FHA appraisal procedures. There are rules governing a wide range of issues, conditions, and problems, but FHA appraisal rules don’t address each and every issue. Some areas are left to state/local building code, federal health guidelines, or other regulations. Other issues are clearly defined in the appraisal section and are non-negotiable (with certain exceptions that may apply) except where the law (local, state, or federal) may have a say. Some of these clearly defined areas include zoning and the non-residential use of a property to be purchased with an FHA mortgage. HUD 4000.1 has some specific things to say about both. When it comes to the non-residential nature or use of the property, FHA appraisal rules are clear | more...

January 4, 2017

FHA Loan Co-Signers & Co-Borrowers

By Joe Wallace

A reader asked us a question this week in the comments section about FHA loan co-signer and/or co-borrower rules. “If there is more than one person on the loan application, does it matter what percentage each person owns?” There are a number of variables that need to be addressed to properly answer this question. For example, does the reader refer to a co-signer, or a co-borrower? Are the applicants legally married? If so, do they reside in a community property state? FHA loan co-signer rules in HUD 4000.1 don’t specify a percentage of ownership for co-signers. The rules simply state the co-signer is “liable for the debt”. FHA loan rules for eligibility of co-borrowers (occupying and non-occupying) don’t mention a percentage of ownership, either: “To be eligible, all occupying and | more...

When Is An FHA Loan Better Than A Conventional Loan?

December 30, 2016

Property Types Eligible For FHA Mortgages in 2017

By Joe Wallace

FHA mortgages for single family residences include a wide variety of eligible property types. You can purchase a typical suburban home with an FHA loan, a condo unit, manufactured home, modular home, or other approved structure meant to house a family that qualified under FHA loan rules. These properties can be single-unit homes or have up to four living units. While it’s true that not all lenders approve loans for all the possible types of housing available under the FHA program (some lenders choose not to loan money for mobile homes or new construction homes, for example) there are some general guidelines about the types of property you can purchase from a participating lender. FHA mortgages are approved for those who intend to be owner-occupiers. FHA mortgages are not available | more...