Articles Tagged With: FHA Loan Rules

April 6, 2015

FHA Loan Employment Verification Rules: A Reader Question

A reader asks, “I was trying to get a FHA loan however once all my documentation was sent to the underwriter she denied me, because I am employed by my mother and he VOE was filled out by her. They denied my because they could not use that income. I have my pay stubs & my w-2′s. Where they telling my the truth or just didn’t want to give me the loan because i am only 21. I feel like they didn’t want to give me the loan because i am so young. Everything checked out however they just refused to approve me because my mother filled out the VOE.” Unfortunately there is a great deal of information missing from this reader question that makes it impossible to speculate as | more...

April 4, 2015

House Hunting? Things To Think About On Your Way To An FHA Loan

By Joe Wallace

If you are getting ready to start house hunting and want to buy a dream home with an FHA mortgage, there are a few things to think about as you get ready to start the search for your new house. One very important thing to do is to remember to save up some money for a home inspection. It’s easy to confuse an FHA appraisal, which basically sets the fair market value for the home and insures the property lives up to minimum standards, for a “clean bill of health” for the home. But make no mistake, the FHA does NOT guarantee the home is defect-free even if it DOES pass the appraisal with no corrections. The borrower pays for this optional, but critical service and it’s one that can | more...

April 2, 2015

Commission Income And FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “I made 41000 in 2013 and 65000 in 2014 I am on pace to making over 100000 this year. How will they calculate my income for an FHA loan. I am a saleried and I get commission.” The participating FHA lender is required to calculate the applicant’s income and verify that it is likely to continue–not all income can qualify to be used in figuring out the borrower’s debt-to-income ratio, only “verifiable income”. Commissions can and often are counted as verifiable income for the purpose of FHA loan approval, but that income must meet specific criteria. Borrowers who earn commission must have, in general, been earning the commission for a year or more. The FHA loan rules listed in HUD 4155.1 explain such requirements for verifiable commission | more...

April 1, 2015

New Purchase FHA Mortgage Loans: Some Basics

By Joe Wallace

If you are thinking about applying for an FHA mortgage instead of a conventional home loan, there are aspects of the FHA loan program you should know about before starting the house hunting process that will save you time. Knowing what types of homes you can purchase with an FHA loan, for example, will help you focus your efforts. FHA loan rules published in HUD 4155.2, the Lender’s Guide To The Single Family Mortgage Process, states: “FHA’s single family programs are limited to one- to four-family properties that are owner-occupied principal residences. FHA insures mortgages secured by • detached or semi-detached dwellings • manufactured housing • townhouses or row houses, or • individual units within FHA-approved condominium projects.” The FHA will not approve or guaranty mortgage loans that are secured | more...

April 1, 2015

Spring Thaw, Natural Disasters, and FHA Loans

By Joe Wallace

With the advent of spring comes melting snow, and in some areas that can mean flooding or worse. Some homeowners may find themselves in the way of rising flood waters because of spring showers, storms and other events. What can an FHA borrower do to prepare in case natural disaster strikes near them? The first thing to do is become familiar with the FHA loan natural disaster policy, found on the FHA official site at FHA.gov. That policy page includes the following introduction: “Was your home or your ability to make your mortgage payments harmed by an event that the President declared a disaster? You may qualify for relief to help you keep your home. Much of the mortgage industry and The United States Department of Housing and Urban Development | more...

Can I buy a manufactured home with an FHA loan?

March 30, 2015

FHA Loan FICO Score Minimums: A Reader Question

By Joe Wallace

A reader asks, “My husband recently contacted quicken loans which do fha loans, they pulled his credit and said he was short one point with a score of 619? If you guys are showing you can do loans with scores in the 500s. Why would he of been denied?” One thing potential FHA borrowers should remember about FICO score requirements on FHA home loans is that FHA minimums are just that–the minimum requirement. An individual lender as mentioned in the reader question is free to require a higher FICO score in order to get a loan with that financial institution as long as that higher requirement is applied in accordance with federal laws. It’s true that the FHA loan rules printed in HUD 4155.1 state that a borrower with a | more...

March 30, 2015

FHA Loan Rules: Back To Work

By Joe Wallace

A reader asks, “I have taken the ‘back to work’ counseling class twice. the first one expired but we found a house after it expired. Do you know if FHA can or will waive or make an exception on ‘being completed a minimum of thirty (30) days’ rule. The house is a ‘Fanny Mae’ house and is in Foreclosure. We don’t want to lose it.” The reader is referring to an earlier blog post we wrote about the FHA’s Back To Work Program which may permit, depending on circumstances, a borrower who has experienced foreclosure, bankruptcy or some other negative “economic event” to apply for an FHA home loan once more. According to the FHA official site, “FHA recognizes the hardships faced by these borrowers, and realizes that their credit | more...

March 28, 2015

FHA Loans and Community Property Laws: A Reader Question

By Joe Wallace

A reader asks, “I have a previous property from my divorce showing as a foreclosure on my credit report. The property has actually been in litigation for the last three years and has not been forclosed. My current husband and I are trying to purchase a new home. Do you have any suggestions? Should I apply as a non purchasing spouse?” The course of action suggested in the reader question may be a good one, but there are some variables that can affect whether or not it is possible to do so. The first of these is whether or not the reader lives in a community property state where the laws dictate how shared financial responsibility in a legal marriage is handled. Community property laws may require the applicant(s) and | more...

March 27, 2015

FHA Loan Reader Questions: FICO Scores and Down Payment

By Joe Wallace

A reader sent us a question via our comments section recently, asking: “I HAVE A CREDIT SCORE OF 591, I HAVE WORKED FOR MY JOB FOR 18 YEAR. I WOULD LIKE TO PURCHASE A HOME AND AM WORKING ON MY CREDIT WITH MY CREDIT UNION. WHAT MORTGAGE COMPANY WOULD WORK WITH ME TO GET A HOME? I DON’T HAVE MONEY FOR A DOWN PAYMENT”. Unfortunately, FHA home loans do not offer a zero downpayment option. FHA loan rules found in HUD 4155.1 states clearly that a “minimum borrower cash investment” or downpayment is required. The minimum down payment on any new purchase FHA home loan is 3.5% of the sale price or appraised value of the home (whichever is lower). That information is found in HUD 4155.1 Chapter Five Section | more...

March 26, 2015

FHA Loans and Non-Traditional Credit Histories

By Joe Wallace

There are many situations where a new borrower might want to apply for an FHA home loan, but without bringing a “traditional” credit history to the process. Do FHA loan rules permit a loan even when the borrower doesn’t have a typical credit history, has chosen not to use credit cards, etc? HUD 4155.1, the FHA rulebook for lenders, does make provisions for this. There’s a section of the rules governing what the FHA terms a “Non-Traditional Credit Report” or NTMCR for short: “NTMCRs are designed to assess the credit history of borrowers who do not have the types of trade references that normally appear on a traditional credit report. An NTMCR can be used as a • substitute for a TRMCR or an RMCR for a borrower without a | more...