Articles Tagged With: FHA Loan Rules

October 7, 2015

FHA Loan Appraisal Rules: “Second Appraisal” Requests

We get lots of questions about the FHA appraisal process in the comments section. Here is one of the most recent, which raises an important question about “replacement appraisals” or any request for a new appraisal that has to do with a dispute over valuation of the property. The reader asks, “I have a buyer who is buying a home. The home they are buying already had an appraisal completed. That deal fell through and my buyers offer was accepted. The sellers agent said that the original appraisal came in short and asked that we order a new one.” “He said his seller insists on a new appraisal because the original one done a few week before was less that the purchase price. Is is possible to request a new | more...

October 6, 2015

FHA Loan Appraisal Rules: The Roof

By Joe Wallace

A recent reader question about the FHA appraisal requirements had us looking up details on those requirements in the new FHA Single Family loan handbook, HUD 4000.1. The previous FHA loan rulebooks including HUD 4155.1 and HUD 4155.2 have been superseded by HUD 4000.1, so it seemed like a good idea to post the FHA’s current appraisal requirements for the roof since it’s one of the most commonly asked-about parts of the home with respect to the FHA appraisal process. When the FHA appraiser comes to review the property, the roof is one of the areas that must be evaluated. According to HUD 4000.1 Part II Section B: “The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the roof covering does not prevent entrance of | more...

October 6, 2015

FHA Loans, FICO Scores, and First-Time Home Buyers

By Joe Wallace

A reader asked us a question about FHA loan FICO score requirements in the comments section recently, saying, “Im a first time home buyer and my credit score is 599 to 620 avg. from all 3 bureaus. All my credit cards are paid on time never been late. I dont have any negative accounts on my credit report. Do I have a chance of being approved?” There are two important issues to address with this reader’s question. The first is the reader’s status as a first-time home buyer. The FHA loan program itself does not provide any special status, preference, or benefits for first-time home buyers. That’s not to say that your chosen lender, won’t, or that there is not a state or local assistance program for first-time home buyers. | more...

October 5, 2015

FHA Loans For Non-Permanent Resident Aliens

By Joe Wallace

In our previous post we discussed the fact that United States citizenship is not required for borrowers who want to apply for an FHA home loan. A valid Social Security number is required, and there is a U.S. residency requirement that also needs to be met. That means that a variety of people who are not or are not yet citizens have a chance for an FHA home loan if they meet certain requirements (including proof of a valid SSN). The FHA loan rules for non-permanent resident aliens can be found in HUD 4000.1 Section II Part A, which lists the following instructions to the lender: “A Borrower who is a non-permanent resident alien may be eligible for FHA insured financing provided: –the Property will be the Borrowers Principal Residence; | more...

October 5, 2015

FHA Loan Rules, Citizenship, And The New HUD 4000.1 Rule Book

By Joe Wallace

In our comments section, a reader asked if citizenship is a necessity in order to get an FHA home loan. The reader mentioned that he was in the process of getting a Green Card, and that he had a valid Social Security Number. Do FHA loan rules as published in the new HUD 4000.1 permit this reader to apply for a new FHA mortgage loan even though he is not a United States Citizen? The answer is yes–citizenship is NOT a requirement to apply for an FHA mortgage. Proof of a valid Social Security Number is, and since the reader indicated that he had a valid SSN, the only thing needed to move forward is to find a participating FHA lender and fill out the loan application paperwork. Assuming, of | more...

October 2, 2015

FHA Loan Rules In HUD 4000.1: Deferred Liabilities And Student Loans

By Joe Wallace

We recently got a reader question in the comments section about FHA loan rules covering deferred payments on student loans. In the past we’ve reported that FHA loan rules state certain types of student loan deferments (as explained in the old HUD 4155.1) did not have to be counted in the borrower’s debt-to-income ratio. HUD 4000.1 is the new FHA Single Family Home Loan policy handbook and has plenty of updated information, modifications to rules, and restatements of current policy and supersedes HUD 4155.1. Here’s the reader’s questions about student loans: “I was told by my realtor recently, that my student loan debt, although its deferred for three more years under teacher forgiveness, that the lender she is working with will have to count student loan debt in my DTI, | more...

October 1, 2015

HUD 4000.1 Appraisal Requirements: Safety Hazards

By Joe Wallace

With the publication of HUD 4000.1, the new FHA Single Family Home Loan policy handbook, we’ve been addressing certain rules and regulations found in the new rules to help borrowers and lenders alike understand official policy, updates, changes, and restatements of previous regulations as published by the FHA/HUD. FHA appraisals are also affected by the new handbook. One area that contains crucial information about the appraisal process is the section of FHA appraisal rules that govern safety/environmental hazards as might be found during the appraiser’s review of a property to be purchased with an FHA mortgage. In some cases, you may notice some additional features to this section, and revised language that gives more clarity or guidance for appraisers and lenders. From HUD 4000.1 Section II Part B: “The Appraiser | more...

October 1, 2015

FHA Loan Reader Questions: Occupancy

By Bruce Reichstein

One common question many potential borrowers have about FHA mortgage loans has to do with the FHA’s occupancy requirement. One reader asked us recently, “What is the definition of Occupancy defined by FHA? Does using the space as an office suffice?” FHA single family home loans are only for residential purposes. Borrowers are permitted to use a portion of the property they buy with an FHA loan for business purposes, but the non-residential use of the property cannot exceed 25% of the total floor space of the home. FHA loan occupancy requirements state that the borrower must intend to use the home as the primary residence for at least one year. That means the borrower must move in and take possession of the property within a reasonable amount of | more...

October 1, 2015

Mortgage Rate Trends: A Week Marked by Improvements So Far

By Joe Wallace

It’s been a week full of downward movement for mortgage loan rates; Wednesday at the end of the market day rates were being reported in lows we haven’t seen for months. 30-year fixed rate conventional loans are in a range (best execution) between 3.75% and 3.875% at the time of this writing. We haven’t seen conventional loan rates come near 3.75% for some time now and if the downward trend continues we could see this range persist or move closer to 3.75% for more extremely well qualified borrowers. FHA mortgage rates, which have long stayed in a 3.75% comfort zone, have finally broken out of that in favor of a range of best execution rates between 3.5% and 3.75%. Remember, FHA rates can vary more among participating lenders than their | more...

September 30, 2015

FHA Loans For Rental Properties?

By Joe Wallace

A reader asked us a question recently about purchasing rental property with an FHA mortgage: “I’m considering cosigning on a rental property for my son so he can move in with friends. He has no credit established yet. My husband and i are also in the process of looking to move. How will cosigning affect us if we want to buy in the next 2-6 months and go with an FHA loan?” Is the reader question referring to a situation where the parent wishes to co-borrow with the child to purchase a residence for the child to occupy? Or does it refer to co-signing on a lease to help the child, with the parents later applying for an FHA loan for themselves? In the case of an FHA borrower who | more...