Articles Tagged With: FHA Loan Rules

February 1, 2016

FHA Mortgage Loan Rules In HUD 4000.1: Inducements To Purchase

There are many rules for FHA home loans that govern what buyers and sellers can and cannot do. For example, the borrower must make a minimum down payment, and the source funds from that down payment cannot come from credit card cash advances or payday loans. But there are rules for the seller (and interested third parties) as well. Did you know FHA loan rules govern what a seller can and cannot contribute towards the purchase of the property? In some cases there are contributions that are permitted but only within certain limits. From HUD 4000.1, we learn the following: “Interested Parties may contribute up to 6 percent of the sales price toward the Borrowers origination fees, other closing costs and discount points. The 6 percent limit also includes: –Interested | more...

January 29, 2016

FHA Announces New Insurance Rate Cuts For Multi-Family Loans

By Joe Wallace

The FHA has issued a press release announcing an insurance rate cut for FHA insured multi-family home loans. According to HUDNo.16-008, “In an effort to help preserve and increase the amount of affordable, quality rental housing across the country, the Federal Housing Administration (FHA) today announced a multifamily insurance rate reduction designed to encourage capital financing of affordable and energy-efficient apartments.” The rate reductions announced in the press release are scheduled to take effect on April 1, 2016, and according to the FHA officials site, “directly impact FHAs Multifamily Housing Programs and properties housing low- and moderate-income families and/or developments installing energy-efficient systems or building within federal energy guidelines.” The press release also adds, “U.S. Housing and Urban Development (HUD) Secretary Julin Castro made the announcement today during a visit | more...

January 28, 2016

FHA Loan Questions: Maximum FHA Loan Amounts For Building A Home

By Joe Wallace

A reader asked us a question recently in the comments section about FHA new construction loans: “My husband and I will be building a home, we have land that we are interested in, what is the max for a construction loan and build that FHA gives?” To be clear, the FHA itself does not issue loans–the borrower must find a participating FHA lender willing to offer a new construction loan. When it comes time to determine the maximum loan amount for new construction mortgages, the FHA loan rulebook has specific instructions for the loan officer. How does the FHA instruct lenders to determine the maximum mortgage amount in these cases? According to HUD 4000.1: “The maximum mortgage amount is calculated using the appropriate purchase Loan-to- Value (LTV) percentage of the | more...

What if my home was damaged in a natural disaster?

January 27, 2016

FHA 203(k) Rehab Loans: A Reader Question

By Joe Wallace

Recently a reader asked us a question in the comments section about using FHA loans to purchase property to be converted into a residence. “There is an old church for sale near us that we would love to buy and make into a home. Can this be done using an FHA loan? We plan on only using it for residential use. Its been hard to find a home that we love and that falls into FHA standards.” The answer to this question depends greatly on whether or not the property to be purchased is, in the eyes of the FHA, a one-to-four unit property. FHA loans include something known as a 203(k) Rehabilitation loan, which can be used to rehab, refurbish or repair an existing property. According to HUD 4000.1, | more...

January 25, 2016

FHA Loan Income Questions: Pay Stubs and W-2s

By Joe Wallace

A reader got in touch with us recently to ask a question about FHA loan income requirements. We got the following question in the comments section: “My husband works as a mechanic and gets paid cash so he doesnt really have a proof of income or the last 2 yrs or w2 and has an OK credit score and we are trying to get a FHA loan to buy a house..what do we need to do to be able to qualify?” This is an important issue, especially for self-employed people. The bottom line is that the participating FHA lender is required by FHA loan regulations to obtain proof of income in some way. This proof is needed so the lender can verify the income and insure that it is likely | more...

January 22, 2016

Mortgage Rate Trends: Sideways

By Joe Wallace

Mortgage rates hit lows not seen in many months at the end of last week, and in spite of some small amount of lost ground we still see mortgage rates at sub-four percent lows at the time of this writing. Thursday saw 30-year fixed rate conventional mortgage loan interest rates staying, best execution, in a range between 3.75% and 3.875%. FHA mortgage rates are holding steady at the time of this writing at 3.5% (best execution) which is a far better comfort zone to fall into than the previously long-held 3.75%. How long FHA rates will remain here isn’t clear but the mortgage rates today held fast in spite of some market conditions that ordinarily would put upward pressure on rates. So it’s clear that there’s some potential for rates | more...

January 21, 2016

Qualifying For An FHA Reverse Mortgage

By Joe Wallace

One commonly asked question about the FHA home loan program is whether or not FHA insures or guarantees reverse mortgages. The FHA does have a reverse mortgage loan program, called the Home Equity Conversion Mortgage or HECM for short. Who qualifies for an FHA HECM loan and what are the basic ground rules? To start, it’s very important to understand the difference between an FHA HECM loan and traditional refinancing. According to the FHA official site, “A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.” FHA HECM loans are not like standard home equity loan or second mortgage | more...

January 20, 2016

Proper Use Of The FHA Logo–Why You Need To Know

By Joe Wallace

The FHA and HUD have specific rules about how the FHA logo may be used by lenders and advertisers. To the typical loan applicant, this may seem to be completely irrelevant. The initial reaction to this information is likely to be, “So what?”. But if you receive third-party advertising, or see ads with the FHA logo used improperly, it may be an indication that there’s a potential scam in progress. Not all improper use of the FHA logo is evidence of fraudulent activity–sometimes ignorance of the FHA regulations that cover use of the government’s logos is a factor. But other times there may be a deliberate attempt to mislead a potential customer into thinking that the advertisement or offer is government-approved, government-sponsored, or government initiated. What do FHA loan rules | more...

January 19, 2016

FHA Loan Questions: Tax Service Fees

By Joe Wallace

A reader got in touch with us recently to ask a question about the allowable fees and expenses associated with FHA new purchase home loans (also known as “forward mortgages”). The gist of the question–can an FHA loan applicant be charged a tax service fee as part of closing costs or other loan-related fees and expenses? The answer to this question and others like it can be found in HUD 4000.1, in the portion of the rule book titled Part III Servicing And Loss Mitigation. This section includes a list of prohibited fees and expenses–costs that cannot be charged to the borrower. That list includes the following information: “The Mortgagee must not charge the Borrower for the following services: –costs of telephone calls, telegrams, personal visits with the Borrower, certified | more...

January 19, 2016

Mortgage Loan Interest Rate Trends: 180-Day Lows

By Joe Wallace

Ahead of the three-day weekend, Friday saw mortgage rates break some new ground–rates that, best execution, we havent’ seen in quite some time. Rates broke the four percent zone and began moving lower for both conventional and FHA mortgages. How long this trend may last remains to be seen, but some sources report oil prices and stock market woes as being responsible for at least a chunk of the improvement in mortgage rates we are seeing at the time of this writing. 30-year fixed rate conventional mortgages left the four percent range altogether and headed into best execution territory at a range between 3.75% and 3.875%. On many days where there is improvement, FHA mortgage rates tend to lag behind and remain in a comfort zone (3.75% has been the | more...