Articles Tagged With: FHA Loan Rules

July 29, 2015

FHA Loans And Your Credit

A reader got in touch with us this week to ask if it is possible to get an FHA mortgage loan even if the borrower doesn’t have “perfect credit”. While it’s not clear what the reader means by that phrase, we can answer the question in a general way. The simple answer is yes, borrowers can apply for and get approved for FHA home loans with less than perfect credit, but much depends on the nature of the credit issues on your report and whether there’s an overall pattern of responsible credit use the lender can use to justify approving your home loan. FHA loan rules are clear that individual mistakes in a borrower’s past should not be the sole determining factor when it comes to approving or denying an | more...

July 29, 2015

FHA Refinance Loan Options

By Joe Wallace

Looking for a refinance loan? Do you know what your options are as a homeowner when it comes to refinancing from a non-FHA loan to an FHA mortgage? Or are you in need of an FHA-to-FHA refinance? There are many options available, some of which may surprise you. Did you know there is one type of FHA refinancing which has no FHA-required credit check? Borrowers who are currently paying on adjustable rate mortgages should take a close look at FHA refinance loan options for a variety of reasons. Those who have non-FHA loans can refinance into fixed rate FHA loans, or refinance into another adjustable rate mortgage (ARM)–FHA loan rules permit both options for qualified borrowers. Non-FHA borrowers looking to refinance into an FHA mortgage will be required to get | more...

July 28, 2015

FHA Loans, Foundation Trouble, And Home Inspections

By Joe Wallace

A reader got in touch with us to ask about a situation where a home with foundation problems was purchased with an FHA loan. The reader says a home inspector was not hired because the foundation issue was “supposed to be taken care of” prior to the borrower moving in. Later, the borrower discovered that no corrections to the foundation had been made and further problems were discovered. The main question was whether or not the borrower has any legal recourse in situations like these. FHA loan rules and the FHA/HUD official site are very specific when it comes to borrowers who rely on FHA appraisals and their outcomes instead of hiring a home inspector to take a more in-depth look at the property. The FHA appraisal is not a | more...

July 27, 2015

FHA Loan Closing Costs and Down Payment

By Joe Wallace

A recent reader question in our comments section asked about whether closing costs are including in the FHA minimum 3.5% down payment. Is it true that an FHA loan down payment amount may include closing costs? To fully understand this issue, it’s good to know what can be included in closing costs for your FHA home loan. Closing costs include (but are not limited to) the following: Lender’s origination fee Deposit verification fees Attorney’s fees Appraisal fees and compliance inspection fees The participating lender’s origination fee Any title insurance or title examination Property surveys Credit report fees Certification fees Note that these fees do not have anything to do with the sales price or appraised value of the home. FHA loan rules say that the loan amount for an FHA | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 22, 2015

FHA Streamline Refinance Loans

By Joe Wallace

If you have an existing FHA mortgage loan, you can apply for a refinance loan with no FHA required credit check or appraisal that results in a reduction in your monthly mortgage payment and/or interest rate in most cases. Called the FHA Streamline Refinance loan, these loans are only for existing FHA mortgages and offer no cash back to the borrower. FHA loan rules permit Streamline loans for those who have assumed FHA mortgages. According to the FHA official site (www.fha.gov), the FHA, “does not require an appraisal on a streamline refinance. These transactions can be made with or without an appraisal.” If there is a lender required appraisal, there may be corrections noted. According to FHA loan rules, these corrections may or may not need to be made as | more...

July 22, 2015

FHA Loans and Co-Borrowers

By Joe Wallace

We often get reader questions about co-borrowing, FICO scores and other factors. One recent question asked of us involves a couple who have a single income, student loan debt, and some FICO score issues. The reader wanted to know if being a co-borrower with a higher FICO score could help with loan approval in spite of the co-borrower having no income and student loans. The FHA loan rules found at the FHA official site (www.fha.gov) state the following about co-borrower income: “The lender must analyze the income of each borrower who will be obligated for the mortgage debt to determine whether the borrowers income level can be reasonably expected to continue through at least the first three years of the mortgage loan.” That alone implies that all borrowers to be | more...

July 21, 2015

Self-Employed, Contractor, Or Employee? It Matters When You Apply For An FHA Loan

By Joe Wallace

A recent article posted at CNN Money raises some interesting FHA loan questions regarding the difference between workers who act as independent contractors and those who work as employees. FHA loan rules require more job and income related information from FHA loan applicants who are self-employed or who work as part of a family business. These borrowers may need additional tax data and may need to submit profit and loss statements and related details that can help a lender verify the applicant’s income and employment. According to the CNN Money article titled, “When an independent contractor is really an employee”, there’s a large number of recent lawsuits that, “allege companies should not be classifying workers as free agents. For example, last month a California commission ruled that an Uber driver | more...

July 21, 2015

FHA Mortgage Loan Myths

By Joe Wallace

From time to time we get asked questions about FHA loans that reflect common misconceptions and myths about the program. Borrowers sometimes assume things about FHA single family home loans that aren’t true and it’s always a good idea to post some basic facts about the program from time to time to remind people what’s true and untrue about FHA mortgages. FHA loans, for example, aren’t limited to people on fixed incomes, or to those who must demonstrate a need for a non-conventional loan. FHA mortgages are open to all qualified applicants. Your FICO scores, job history, debt-to-income ratio and other financial qualifications are what determine your ability to get an FHA loan. There is no such thing as earning “too much income” for an FHA loan. There’s also no | more...

July 20, 2015

FHA Loans, Seller Concessions, and Cash To The Borrower

By Joe Wallace

We recently got a question about an FHA loan situation where the seller of the home agreed to pay 3.5% of the closing costs on a transaction. According to the reader question, the “actual permitted seller concessions” were much lower. The reader asked, “Since FHA would not allow cash back”, the buyer asked the seller for the difference of the two amounts to be paid to the borrower, “outside of closing” The question the reader asks: Is this legal? FHA loans do not permit cash back to the borrower except in the form of refunds. However, HUD 4155.2 does include some guidelines for seller concessions, which are limited to six percent of the sales price. Those guidelines do permit “monetary gifts” as we’ll read in a moment. Chapter Four of | more...

July 17, 2015

HUD Charges South Dakota Property Owners With Discrimination

By Joe Wallace

A press release on the FHA/HUD official site announces discrimination charges against the owners of a housing complex in South Dakota. According to HUDNo.15-091, the owners violated the Fair Housing Act by, “initially refusing to allow a resident with disabilities to have an emotional support animal. HUDs charge alleges that even after the resident obtained a support dog, the owners, Robert Christensen, Linda Christensen, and Viking Villas, LLC, placed overly burdensome requirements on the residents use of the dog.” At first glance this case may seem to have nothing to do with FHA home loans, FHA refinance loans or related issues. But for borrowers who want to purchase condo units with FHA loans, or for those who purchase a home in a community with a homeowner’s association, issues like these | more...