Articles Tagged With: FHA Loan Rules

What happens to my FHA loan in a natural disaster?

June 25, 2015

FHA Loan Debt To Income Ratios

Are you concerned about your debt to income ratio going into the FHA loan application process? Do you wonder how your chosen FHA lender will view your existing debts and whether debts that are scheduled to be paid off at some point in the near future might affect your FHA loan application? It helps to know what the FHA loan rulebook says about a borrower’s overall credit worthiness. At the time of this writing, the FHA and HUD are preparing to transition to a new FHA loan rulebook, but the previous references still apply until then. On the FHA official site you will find HUD 4155.1, which includes a section in Chapter Four about how the lender is to analyze the borrower’s credit. That section says in part: “When analyzing | more...

June 24, 2015

FHA Single Family Home Loans: Owner-Occupiers Only

By Joe Wallace

Recently we answered a reader question in the comments section about the nature of FHA single-family home loans. The reader wanted to know if it was possible to get an FHA home loan on a home to be used as a rental property or as a guest house for visitors, etc. The short answer to this question is no. FHA loans are designed for those who intend to purchase a home and move into it when the loan closes. The borrower is required to occupy the home as his or her personal, primary residence as a condition of loan approval. This would prevent borrowers from purchasing the home to use as a rental property, vacation home or guest house. HUD 4155.1 Chapter Four Section B spells it out in black | more...

June 23, 2015

FHA Loans For Eligible Properties

By Joe Wallace

Recently we posted about two types of property you cannot purchase using an FHA home loan: houseboats and recreational vehicles. The reasons you cannot get an FHA-guaranteed home loan for these things is because they cannot be affixed to a permanent foundation. So what kinds of property can you purchase–or refinance–with an FHA loan? Many would assume that a typical suburban home is allowed, and that is true. But so are condo units in FHA-approved condominium projects, manufactured homes, and many other types of property you might not find in a typical neighborhood in the ‘burbs. FHA loan rules currently found in HUD 4155.2 at the time of this writing spell out the list of properties a lender may offer FHA loans for. They include the following guidelines to the | more...

June 22, 2015

FHA Loans For Houseboats and RVs?

By Joe Wallace

One very common question about FHA loans involves the type of properties eligible for a single-family loan. FHA loan rules state that certain types of properties cannot be considered eligible for an FHA loan, including condo-hotels, time shares, and seasonal homes. One of the sticking points for these properties when it comes to the FHA loan rulebook is that there is either intermittent occupancy (due to the nature of a condo-hotel, for example) or occasional occupancy intended for the home to be purchased with the FHA loan. Unfortunately, in these cases the FHA loan occupancy requirement is often what bars the loan–you are required to be an owner-occupier of the property you buy with an FHA single-family mortgage loan. But what about properties where the borrower does intend to live | more...

June 20, 2015

FHA Mortgage Loan Interest Rate Trends: Recovering?

By Joe Wallace

It’s been an interesting week for mortgage rates–there was some breath-holding ahead of the Fed announcement that interest rates would not be hiked just yet, and we’re entering a period now where market watchers have labeled 2015 as a time of upward movement for rates in general. But the overall trend this week wound up being downward movement, however small. Rates fell a bit on Friday to end the week, but you’ll notice that a smaller number of lenders are offering the lower best execution 4.0% than those offering 4.125% best execution on 30-year fixed rate conventional mortgages. FHA mortgage loans still haven’t budged out of the best-execution comfort zone of 3.75% for the most qualified borrowers. Remember, best execution rates are not available to all applicants or from all | more...

June 19, 2015

FHA Amends HECM Loan Policy To Help Non-Borrowing Spouses

By Bruce Reichstein

After many changes to FHA Home Equity Conversion Mortgage (HECM) rules, another round of changes has been announced. The FHA HECM loan program has probably changed more in the last year or so than any other single-family FHA loan program, and many of the changes we’re seeing now address important issues related to what happens when the primary borrower dies and/or the HECM loan is about to be declared due in full. According to HUDNo.15-073, the FHA has “issued a revised policy under its Home Equity Conversion Mortgage (HECM) Program giving FHA-approved lenders expanded options to allow eligible non-borrowing spouses the potential to remain in their home following the death of the last surviving borrower.” In 2014 there were changes in FHA HECM policies, “to allow for the deferral of | more...

What you should know about FHA 203(h) Loans For Disaster Victims

June 19, 2015

FHA Appraisals: Pass Or Fail?

By Joe Wallace

We field many questions about FHA home loans. Some of those questions have to do with a borrower’s appraisal process and whether certain conditions will cause the home to pass or fail an FHA appraisal. One variation on the types of questions we get concerning appraisals goes like this: “We are buying an a home that failed initial appraisal for small repairs. We made repairs to X, Y, and Z, but had to make the repairs to one area as a make-do or temporary fix. Will this pass the re-appraisal?” There are several issues at work here. The first is correcting a misconception about the appraisal process itself. When a home gets appraised for an FHA loan and corrections or repairs are listed which must be made as a condition | more...

June 17, 2015

Home Loan Disclosure Changes Coming August 1, 2015

By Joe Wallace

On August 1, 2015, new federal laws will require changes to loan information disclosures that are designed to make borrowers more fully informed. The new requirements affect FHA, VA, conventional and any other type of mortgage loan. The new requirements, announced by the Consumer Financial Protection Bureau, “…will simplify and improve disclosure forms for mortgage transactions. Consumers currently receive different, but overlapping federal disclosure forms with the terms and costs of mortgage loans.” That overlap proves confusing for borrowers, especially those who have never purchased or refinanced a home loan before. Two new forms replace the set of previously required disclosures. According to CFPB.gov, these new forms are, “the Loan Estimate, given three business days after application, and the Closing Disclosure, given three business days before closing.” CFPB says all | more...

June 15, 2015

FHA Refinance Loan Options: FHA-To-FHA, Non-FHA to FHA

By Joe Wallace

Is now the right time to refinance your mortgage with an FHA loan? Many are considering their options, but if you don’t know the possibilities offered by an FHA refinance loan, now is a good time to get caught up on what’s available for owner-occupied single family home loans. FHA single-family home loan refinancing is available for both existing FHA loans and non-FHA mortgages. Your current loan can be an FHA, VA, conventional, or any other type of home loan that meets FHA program requirements for refinancing. Borrowers applying for any type of single family FHA home loan must be owner-occupiers of the property securing the new loan. For existing FHA loans, there is an option for cash-out (appraisal and new credit check required), no cash out (an appraisal and/or | more...

June 12, 2015

HUD Secretary Castro on LGBT Month

By Joe Wallace

On the FHA/HUD official site, there’s a blog post by HUD Secretary Julian Castro, which announces that June is Lesbian, Gay, Bisexual, and Transgender Month, described by Castro as, “a time to recognize the lasting contributions that these Americans have made to our nation, and to honor the progress thats been achieved in securing equal opportunity for all.” He adds, “Right now, were in the midst of a period of transformative change. In recent years, barriers that once blocked too many of our fellow Americans from living and loving freely have come tumbling down. In 2013, the Supreme Court struck down the Defense of Marriage Act, helping ensure that all couples are treated fairly under the law. Same-sex couples are now able to get married in 37 states. And earlier | more...