Articles Tagged With: FHA Loan Rules

May 15, 2015

FHA Loan Rules For Employment: A Reader Question

A reader asks, “if one party has a temp position to perm and there is a letter from temp staff stating that she will be hired full time at the end of the 6 month probation period by the company she is working for can we be eligible for a fha loan or will it get denied?” FHA loan rules for verifying employment and income from that employment are found in HUD 4155.1 Chapter Four, Section D, which states in part: “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrowers employment for the most recent two full years, and the borrower must: –explain any gaps in employment | more...

May 13, 2015

FHA Loan Rules For Commission Income: A Reader Question

By Joe Wallace

A reader asks, “With commission income can a person be at one job for about a year and then move to a different employer but same line of work and still commission type pay and be there for a year qualify? Can the 2 years be from different employers?” This scenario would be handled on a case-by-case basis by the lender for several important reasons. The lender will need to determine if the commission income is likely to continue, for starters, and also insure that the amount of commissions has not decreased. FHA loan rules in HUD 4155.1 state: “Commission income showing a decrease from one year to the next requires significant compensating factors before a borrower can be approved for the loan. A borrower whose commission income was received | more...

May 13, 2015

FHA Loan Rules, Reverse Mortgages and Seasoning Periods

By Joe Wallace

A reader asks, “I had a foreclosure in 9/12/2012. I have applied for a reverse mortgage several months ago. The loan officer told me that I would have to wail until sept 2015 to re-apply. Is there any way I can overcome this dead line.” There are some vagaries with this reader question that require addressing, but we’ll answer the basic query first. FHA loan rules state that exceptions are possible to the minimum “seasoning period” or mandatory waiting time to apply for an FHA loan, but this requires the borrower to meet certain criteria. It would also require the willingness of the lender, which in the case of this particular reader question, does not sound possible with that particular financial institution based on what was shared above. In order | more...

May 11, 2015

FHA Loan FICO Score Standards For Mobile Home Loans: A Reader Question

By Joe Wallace

A reader asks, “Can you advise if I can obtain a loan with a credit score of 564. I want to purchase a mobile home” This is such a common question–many borrowers want to know if their FICO score is good enough to qualify for an FHA home loan. The answer is that it all depends on the lender. FHA FICO score minimums, as published in the FHA loan rules in HUD 4155.1, technically allow a borrower with a FICO score above 500 to apply for an FHA loan. Borrowers with FICO scores below 580 but above 500 do not qualify for maximum FHA financing–these applicants would be required to apply for a loan with a higher down payment than those applying for a loan with FICO scores above 580. | more...

May 9, 2015

FHA Loans, Your Credit Report and the Debt-To-Income Ratio

By Joe Wallace

A reader asks, “My question is about what debt matters and witch debt doesnt.I have 4 debts that have been removed from my credit report according to credit karma and 1 credit card that is closed but I owe 1100 dollars on.” Any current debt (outside of student loans under qualifying deferment plans and qualifying medical debt which may be viewed by the lender in a different way depending on circumstances) may affect a borrower’s debt to income ratio calculation for an FHA loan. Anything that has dropped off your credit report won’t be an issue–if it isn’t on your credit record chances are it’s not a factor in the loan approval process unless there’s some record of missed or late payments associated with the accounts that does exist. When | more...

Can I buy a manufactured home with an FHA loan?

May 8, 2015

FHA Loans With Co-Signers: A Reader Question

By Joe Wallace

A reader asks, “when can a co-signer be released from the mortgage note when the borrower can show capacity to pay, can the co-signer get out within 6 mo or 12 months showing borrower has the income to pay mortgage?” The problem with answering questions like this is fairly simple–we don’t know the language of the purchase contract. Much depends on what is contained in the purchase agreement and depending on whether or not the reader has already signed legally binding paperwork in connection with the FHA mortgage loan–that makes a big difference in the answer to the question. For example, could a borrower and co-signer who have not legally committed to the sale negotiate with the lender to have such “ability to pay” language included in the mortgage loan | more...

May 8, 2015

FHA Refinance Loans And FHA Case Numbers: A Reader Question

By Joe Wallace

A reader asks, “I bought my home in 2009. Its a FHA mortgage. I do not qualify to refinance because paperwork and case number were assigned after may 1 2009. I need to know what I can do to refinance with a FHA mortgage I need to Lower my payments, smaller interest rate shorten time on contract I feel like im stuck. There has to be a way to get this done.” It’s not clear why this reader believes an FHA home loan isn’t eligible to be refinanced because of the date of the case number–qualified borrowers are free to apply for FHA refinancing for their home loans regardless of the date of the case number, provided a minimum of six months and six mortgage payments have been made. That’s | more...

May 7, 2015

FHA Loans And The Credit Review

By Joe Wallace

We get many questions about FHA loan applications–questions that involve credit, FICO scores, FHA loan standards, and more. Many borrowers aren’t sure about whether they have FICO scores high enough to qualify for an FHA mortgage, and others may wonder if having a history of late or missed payments could hurt their chances at an FHA home loan. In general, borrowers are encouraged to wait to apply for an FHA mortgage until they have 12 full months of on-time payments on all financial obligations. This brings a potential home loan borrower closer to FHA loan approval; anything less can put your loan application in danger. Why? It’s good to know the FHA stance on these issues, and the FHA loan rulebook does spell out the reason why such a premium | more...

May 6, 2015

FHA Mortgage Loans and the Fair Credit Reporting Act (FCRA)

By Joe Wallace

Most FHA loan applicants are well aware when they apply for a new home loan that they are about to give permission to the lender to do an extensive review of FICO scores, loan repayment history, financial responsibility in general, income, and much more. But did you know that there are federal laws that govern how a lender must proceed in order to be fair during the process? These laws also explain in general what to do if negative credit information requires “adverse actions” such as denial of a loan application. The Fair Credit Reporting Act instructs lenders on how to proceed in such cases, and FHA loan rules in HUD 4155.2 Chapter One, Section B include the following: “The Fair Credit Reporting Act (FCRA) is intended to control collection | more...

May 6, 2015

FHA Loans And Interest Rate Trends: The Interest Rate Lock

By Joe Wallace

FHA home loans, like their conventional mortgage counterparts, feature interest rates that must be negotiated between the borrower and the lender. HUD 4155.1 Chapter One verifies this, stating: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points”. In recent days at the time of this writing, FHA and conventional mortgage rates have been in a state of flux, moving higher due to upward pressure from overseas economic developments and other factors. FHA borrowers may wonder how they might be protected from further increases in mortgage loan rates, should they occur, once they have committed to an FHA home loan. That is where something called the interest rate lock comes into play. The lender and borrower can | more...