Articles Tagged With: FHA Loan Rules

August 24, 2015

FHA Loans And Non-Purchasing Spouses

There are a lot of questions asked about FHA loans and how spouses can buy together. Can the FICO scores of one spouse make up for the lower scores of the other borrower? Can one spouse’s income offset the lower income of the other? How does state law factor into FHA loan applications when spouses apply? All valid questions. But what about circumstances where one spouse is not borrowing? Does an FHA loan require action on the part of a non-borrowing spouse? The answer can be influenced by state law, lender standards, and FHA loan regulations. At the time of this writing, FHA loan rules that govern non-purchasing spouses can be found in HUD 4155.1 Chapter Four, Section A. There we learn the following: “If required by state law in | more...

August 24, 2015

FHA Loans For Borrowers With Past Delinquencies, Defaults, Or Claims On FHA Mortgages

By Joe Wallace

Of all the questions we get in our comments section about FHA loans, one of the most common topics involves new FHA loans for borrowers who have past bankruptcies, judgments, foreclosures, etc. The answers to these questions depend greatly on circumstance, but what do the FHA loan rules have to say specifically about those who want to apply for a new FHA mortgage, but have had problems with a previous FHA-guaranteed loan? The answers to these questions can be found, at the time of this writing, in HUD 4155.1, Chapter Four, which instructs the lender as follows: “If the borrower has had past delinquencies or has defaulted on an FHA-insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage. The three-year waiting period | more...

August 21, 2015

FHA Single Family Home Loan Rules On Owner-Occupier Status and Investment Properties

By Joe Wallace

FHA loan rules on the nature of “owner-occupied” residences state that a single-family mortgage loan guaranteed by the FHA is only for borrowers who want to live in the home they buy. The “owner occupier” nature of FHA home loans is secured by rules in HUD 4155.1 designed to prevent investors from using this type of FHA mortgage. You’ll find the guidelines for owner-occupied residences in Chapter Four, Section B, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrowers principal residence within 60 days of signing the security instrument, with continued occupancy for at | more...

August 20, 2015

FHA Loan FICO Score Requirements: Your Mileage May Vary

By Joe Wallace

One of the most common questions about FHA home loans centers around FICO scores. Many borrowers wonder why their FICO scores may or may not be good enough to get FHA loan approval. FHA loan rules have minimum FICO scores defined in HUD 4155.1, but the confusion comes when a borrower who knows these minimums gets told their scores aren’t high enough for maximum financing or loan approval, depending on circumstances. The reason for this is simple: FHA loan minimums aren’t necessarily the lender’s minimum standards for FICO scores. The lender is free to require higher FICO minimums as long as that requirement is enforced in compliance with federal law. The minimum FHA FICO score requirement of 580 or better for maximum financing isn’t always what the lender will require–your | more...

Can I buy a manufactured home with an FHA loan?

August 19, 2015

FHA Loan Rules For “Qualifying Ratios”: Your Debt-To-Income Ratio

By Joe Wallace

We write a great deal about what it takes to qualify for an FHA loan–income verification, FICO scores, employment history, sources of down payment funds, etc. But there’s a very important part of the FHA loan application data you submit that the lender will review to insure you can actually afford your new loan. Borrowers are required to submit their income and employment data to the lender; the lender is required to do calculations based on that data to see what your debt to income ratio is–the amount of money you have coming in from verifiable sources versus the amount you have going out in monthly financial obligations. If your debt to income ratio is too high, you may have trouble qualifying for an FHA mortgage. But what is the | more...

August 18, 2015

FHA Streamline Refinance Loans: Basics For Credit Qualifying Streamline Refinancing

By Joe Wallace

In our last blog post we discussed some basics on FHA Streamline Refinance Loans. The FHA Streamline Refinance loan program permits lenders to process the loan paperwork for these refinances (FHA-to-FHA only) with no credit check in most cases. But lenders are free to require a credit check, and there are some cases where the credit check is required if add-ons to the loan cause the borrower’s monthly payments to increase by 20% or more, but there are other circumstances that may also require credit-qualifying. HUD 4155.1 states: “A credit qualifying streamline refinance must be considered: –when a change in the mortgage term will result in an increase in the mortgage payment of more than 20% –when deletion of a borrower or borrowers will trigger the due-on-sale clause –following the | more...

August 18, 2015

FHA Streamline Refinance Loans: Some Basics

By Joe Wallace

FHA refinance options for those who already have FHA mortgages include something know as the FHA Streamline Refinance. FHA Streamline Refinance loans allow FHA borrowers to apply for a refinance loan designed to lower monthly payments, interest rates (or both), get out of an adjustable rate mortgage, or refinance from one fixed-rate loan to another. Borrowers can also, according to FHA loan rules, refinance from one adjustable rate mortgage to another. The rules that govern FHA streamline refinance loans are found in HUD 4155.1, Chapter Six, Section B, which begins by explaining that FHA Streamline Refinances: “–are designed to lower the monthly principal and interest payments on a current FHA-insured mortgage, and — must involve no cash back to the borrower, except for minor adjustments at closing that are not | more...

August 17, 2015

Qualifying Income For FHA Loans: Required Paperwork

By Joe Wallace

We’ve written in recent weeks about the process of verifying income for an FHA home loan–the nature of your employment, additional income, and other financial factors that might contribute to your debt to income ratio are required to get scrutinized by the lender. The lender’s process for verifying income is spelled out in HUD 4155.1 Chapter One Section B, but there’s one part of the rules we haven’t covered in our other blog posts–the Verification of Deposit requirement. Chapter One Section B states that the lender must get documentation in writing for all “assets to be used in qualifying” for the FHA mortgage. Borrowers should expect to furnish verification in writing for the last three months worth of qualifying at a minimum. The borrower can provide either a written Verification | more...

August 17, 2015

FHA Mortgage Loan Interest Rates

By Joe Wallace

FHA home loans have a set of rules that govern interest rates. HUD 4155.1 explains that lenders must inform the borrower that FHA loan interest rates are negotiable–FHA does not set or regulate the rates, though it does require interest rates on FHA loans to be reasonable and “customary” compared to similar loans of its type. Chapter One of HUD 4155.1 states: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” We write regularly about FHA loan interest rate trends, and discuss something called the interest rate lock or interest rate lock-in, which is an agreement between the borrower and lender to commit to a mortgage rate for a specific period of time, to protect the | more...

August 15, 2015

FHA Mortgage Loan Interest Rate Trends: Higher, Lower, Higher, Lower…

By Joe Wallace

Mortgage rates had a back-and-forth week, with rates starting off higher, wiping out the gains seen on the previous Friday. Then on Tuesday, news of China’s currency policies pushed rates back down into the high three percent range (best execution) for 30-year fixed rate conventional mortgage loans. FHA rates stayed in their comfort zone of 3.75% that day in spite of the improvements; FHA rates tend to take longer to adjust until there’s been a sustained move in one direction or the other, or a dramatic change in rates on a single day or two. Overseas currency drama over the value of the Yuan had an effect on rates all week–either waxing or waning influence, depending on the day and sometimes even the time of day. On Wednesday, rates began | more...