Articles Tagged With: FHA Loan Rules

December 10, 2015

FHA Loans and Divorce/Separation

We get many questions about how an FHA home loan transaction might be affected by divorce. One of the latest involves a situation where the potential FHA loan applicant wants to apply during a divorce proceeding: “I am currently in the process of legally separating/divorcing my husband. Once granted in court, I plan to apply for an FHA first home buyer loan to find a home for myself and our infant son. From what I am reading online, FHA may still require my husband to do a credit check, etc. However, my question is, if he and I are legally separated in the interim of divorce proceedings and live apart, will his income still be included in the total household limitations? On my own I qualify for both an FHA | more...

December 9, 2015

HUD 4000.1 On Post-Chapter 13 Bankruptcy Waiting Times For A New FHA Loan

By Joe Wallace

The recently-published rulebook for FHA single family mortgages, HUD 4000.1, contains new rules and guidelines for participating lenders, plus rules that have been updated, clarified, or restated from the previous editions of the rules. One important area of the new rule book pertains to potential FHA loan applicants who want to apply for a new loan following a Chapter 13 bankruptcy. We get many comments and questions each month involving scenarios where a borrower wants to apply for a new home loan following a bankruptcy. Since the publication of the new rules, what does the FHA/HUD have to say about filing for a new mortgage following a Chapter 13? From HUD 4000.1: “A Chapter 13 bankruptcy does not disqualify a Borrower from obtaining an FHA- insured Mortgage, if at the | more...

December 8, 2015

FHA Mortgage Loans and Home Inspections

By Joe Wallace

When you buy a home with an FHA mortgage, there is a process known as a appraisal that must happen prior to loan approval. An FHA appraisal involves a professional who reviews the property to insure it meets FHA minimum standards for safety, economic viability, and livability. Some mistake the FHA appraisal process for a home inspection, but the FHA and HUD are quick to point out that the appraisal is NOT a complete, top-to-bottom review of the home. We get comments and questions about this process in our comments section, and many of them have a familiar theme. Consider this recent reader comment: “…it boggles my mind how I could have bought my home 5 short months ago with an FHA loan and found out that it was infested | more...

December 8, 2015

FHA Home Loans For Existing Properties: Weatherization

By Joe Wallace

Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1: “The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance.” This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1: “Weatherization improvements may be financed in conjunction with the following: –Section 203(b) purchase transaction (or) no cash-out refinance transaction –Section 203(h) Mortgage Insurance for Disaster Victims –Energy Efficient Mortgages (EEM)” The loan rules for this type of FHA mortgage or refinance includes a list of eligible | more...

December 7, 2015

FHA Refinance Loans: A Checklist

By Joe Wallace

Are you thinking about refinancing your home loan? There are many things you will want to consider in the planning stages that can help speed you to the application stage of your new loan. Here are some basics you should consider when saving and planning to refinance: The Type of Refinancing You Need Are you searching for a Streamline Refinance for your existing FHA mortgage loan? Or so you need to refinance from a conventional or other non-FHA mortgage into an FHA home loan? Do you want cash out? Or do you just need lower payments? All these factors are important to consider when choosing the FHA loan product that is right for you. An FHA Streamline has different rules and requirements than an FHA Cash-Out Refinancing loan. Know the | more...

December 4, 2015

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader got in touch with a question in the comments section about FHA loan FICO score requirements, asking, “I have a client that was denied by my lender but has an approval by another. My situation is this.parents are putting $200k down for the purchase. The boys will be qualifying for the $150k balance. Mid FICOS are 600 and 602 and one son has two lates within the last 6 months. My lender said that with a score below 640, they fall into a different category that prohibits any lates in the past 12 months. Can you please clarify?” Lender standards vary from one financial institution to another, so it’s entirely possible what the reader is asking about here is a specific lender’s standard. In general it’s strongly discouraged | more...

December 3, 2015

Mortgage Loan Trends: Lower, Then Steady Ahead Of Potential Volatility

By Joe Wallace

On Tuesday there was improvement in mortgage loan rates, with some lenders moving back into sub-four percent territory. That’s a welcome development for those who have been floating in hopes of some kind of improvement; Wednesday didn’t bring more of the same, but rates did hold steady or move only a bit higher in some cases. This is a week for a great deal of potential volatility in rates for a variety of reasons connected to scheduled economic data releases, so locking and floating decisions are tricky–the closer we get to Friday, the greater the potential for higher rates. Friday, the Employment Situation Report comes out and that is a very important event depending on both the contents of that report and investor reaction to it. Some industry pros are | more...

November 30, 2015

FHA Loans After A Deed-In-Lieu Of Foreclosure

By Joe Wallace

A reader question came in recently asking about the possibility of getting an FHA home loan following a deed-in-lieu of foreclosure (DIL) action. “Is a deed-in-lieu derogatory on a credit report?” was one of the questions. The answer to that is that yes, a deed-in-lieu is considered a negative on your credit report. But FHA loans do offer some hope for borrowers who have since the deed-in-lieu established good credit once more. FHA loan rules in HUD 4000.1 cover the requirements in these circumstances for single-family “forward mortgages” after a deed-in-lieu of foreclosure, and those rules include mandatory waiting times or “seasoning periods” following the DIL. When can a borrower apply for a new FHA home loan after a deed-in-lieu? According to HUD 4000.1: “A Borrower is generally not eligible | more...

November 27, 2015

FHA Loan Limits For 2016?

By Joe Wallace

Close to the end of each calendar year, the FHA and HUD issue a set of FHA loan guarantee limits for the coming new year. These limits, issued by county and variable depending on the housing market and other factors, do not put a cap on the amount of the actual loan you can apply for under the FHA single family home loan program, but the limits do regulate the amount of the loan guarantee by the government. The FHA loan limits are described on the FHA/HUD official site–the following information was issued last year and effective for the 2015 calendar year: “Each year, FHA recalculates its national loan limit based on a percentage calculation of the national conforming loan limit.” “Depending on those limits, FHA’s minimum national loan limit | more...

November 25, 2015

HUD Settlement With Illinois Landlord Over Lead Hazard

By Joe Wallace

The FHA/HUD official site has issued a press release announcing a settlement in a case involving lead hazards in Illinois rental properties. This may seem at first glance to have nothing to do with FHA home loans. But this case is an important reminder of why it is so important to report issues connected with fair housing, hazardous conditions in housing, and related issues–the victims in cases like these are often the only defense against continued violation of federal laws, environmental guidelines, etc. According to HUDNo. 15-151, the Department of Housing and Urban Development, “announced a settlement with a Rockford, Illinois landlord to resolve a claim he failed to inform tenants, some with young children, that their homes may contain potentially dangerous lead.” According to the press release, the agreement | more...