Articles Tagged With: FHA Loan Rules

April 24, 2015

FHA Home Loans and Tax Lien Repayment Plans: A Reader Question

A reader asks, “I have a payment plan on a tax lien from 2009 which I have been paying on time for a few years. Other than that, my credit is perfect. I am wondering if this would be okay for an FHA loan. I have records from IRS showing that this is being paid and can present them as well.” This is an important question. FHA loan rules do not permit borrowers who are delinquent on federal debts to apply for an FHA home loan until that delinquency has been addressed. But what about situations like the reader question, where there is no delinquency, but the federal debt still exists? FHA loan rules that govern the tax lien issue can be found in HUD 4155.1, Chapter Four, Section A. | more...

Can I buy a manufactured home with an FHA loan?

April 23, 2015

FHA Loan Income Rules: A Reader Question

By Joe Wallace

A reader asks, “Where I can find the income limits on FHA loans, if customer is buying for the first time?” This reader question implies two misconceptions about FHA home loans. The first is that there is a preference, advantage, or other special treatment given to first time FHA loan applicants or first-time home buyers. This is not true insofar as the FHA single-family home loan program itself is concerned. It’s true that there may be state or local programs in the borrower’s zip area that might be available to help first time home buyers. It may also be true that some financial institutions offer first time home buyer programs. But the FHA loan process itself shows no preference, gives no special benefits to a borrower who has never applied | more...

April 22, 2015

FHA Loan Employment Rules: A Reader Question About Changing Jobs

By Joe Wallace

A reader asks, “Would I still be eligible for an FHA Loan if I accept a position that with a higher salary with a different employer? Ive been on my current job for almost 7.5 years. My new and current positions are in different fields. However, the new position is in the same field as that I was in prior to my current job. I was told that longevity on the job was part of the criteria aside from creditworthiness, debt/income, etc. I dont want to miss this opportunity to purchase a home and I dont want to miss this job opportunity.” Let’s examine what FHA loan rules have to say on this subject–part of the answer to this reader question is found in Chapter Four, Section D of HUD | more...

April 22, 2015

FHA Loans For Mixed Use Properties: A Reader Question

By Joe Wallace

Many of our reader questions posted in the comments section here come from loan applicants and home buyers, sometimes even sellers, all wanting to know more about certain aspects of the FHA loan process. But one recent question comes from a lender, who asks: “Customer had bankruptcy chapter 7- discharged 1-2012. Wants to but a home that has a convience store attached to it. Can I do the loan with 5% down and count the income from the store?” FHA loan rules for mixed-use property appraisals address this issue. HUD 4150.2 Chapter Three states: “A qualified property must be predominantly residential in use and appearance. Any nonresidential use of the property must be subordinate to its residential use, character and appearance. A property, any portion of which is designed or | more...

April 21, 2015

FHA Loan Closing Costs

By Joe Wallace

One common question asked about FHA home loans involves closing costs. Many FHA borrowers want to know how much to expect in the form of closing costs, but the simple answer to these question is, “it all depends”. Depending on what? No two housing markets are the same, and no two lenders are exactly the same either. The amount of closing costs you have to pay will vary based on these factors plus how state law may affect your transaction, possible property tax issues, how much is charged in your local area for certain services rendered, etc. Cost of services may vary, but the FHA has built in some protections for the borrower when it comes to those charges. HUD 4155.2 Chapter Six has some things to say about closing | more...

April 21, 2015

FHA Loans and Divorce: A Reader Question

By Joe Wallace

A reader asks, “My soon to be ex is on the deed but we’re both on the mortgage. He is working with the bank to complete a DIL. Do I have to be notified or agree to this since I’m on the mortgage? If the bank is going to forgive the debt shouldnt i know whats going on? I currently live in the house and concerned I will be evicted without warning.” While there are a number of factors that may affect how an FHA mortgage loan is handled when a married couple is in the process of getting legally divorced, it should be pointed out that all parties that are legally/financially obligated on an FHA home loan have the right to contact the lender in such cases to get | more...

April 20, 2015

FHA Home Loans and Your Credit Report: Disputing Errors

By Joe Wallace

Some borrowers who want to apply for an FHA loan find their applications held up by problems with what is on their credit report. Are you finding outdated or even erroneous information on your report? There is some good advice for those who find themselves in this predicament, thanks to a government website called ConsumerFinance.gov. A page there titled, “How do I dispute an error on my credit report?” has some very good advice about corrected errors on your credit report, starting with: “Contact both the credit reporting company and the company that provided the information. You should explain what you think is wrong, why, and include copies of documents that support your dispute.” When you deal directly with a creditor, there are certain types of disputes the credit will | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 20, 2015

FHA Home Loan Rules On Fair Housing

By Joe Wallace

April is Fair Housing Month, and the FHA/HUD official site has a variety of resources for borrowers who want to know more about Fair Housing Act laws, and how such laws pertain to both borrowers and lenders. The FHA and HUD are quite serious about equal access to housing, but what do FHA home loan rules say about Fair Housing rules and how are participating FHA lenders expected to comply with those rules? HUD 4155.2 Chapter One, Section B has some important guidelines: “HUD is responsible for enforcing the Fair Housing Act. The Fair Housing Act, contained in 42 U.S.C. 3605, prohibits discrimination in residential real estate-related transactions, such as • making or purchasing loans or providing other financial assistance, and • the terms and conditions for making available loans | more...

April 18, 2015

FHA Loan Rules For Income: Is There A Maximum Limit?

By Joe Wallace

A reader asks, “I was prequalified for an FHA loan and during escrow, my agent said I made too much money to be eligible for the loan. Does that make sense?” The simple answer to this question is no, the notion that a borrower makes too much money to qualify for an FHA mortgage loan does not make sense. But let’s examiner what official FHA and HUD documents say about the single-family FHA loan program: “If you are buying a home, refinancing a mortgage for a home you already own, or making home improvements, you may qualify for an FHA-insured mortgage. In fact, almost anyone who has a satisfactory credit record, enough cash to close the loan, and sufficient steady income to make monthly mortgage payments can be approved for | more...

April 17, 2015

FHA Loans After Foreclosure, CAIVRS, and Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “We have some questions regarding applying for a mortgage. we have extenuating circumstances that are keeping us from being approved and so we are looking for some direction. First my income, I am a Rn working through an agency therefore, a large portion of my weekly pay in non taxed. The first lender could not verify my income because my w2 is less then my take home pay. We went with another mortgage broker and they were able to verify my income. Then as we were going through the process, our CAIVRS # was declined.” “We cleared it up with FHA and they gave us the green light to proceed with a mortgage, however, our lender is still declining us . What happened was we had a | more...