Articles Tagged With: FHA Loan Rules

March 24, 2015

Basic FHA Loan Eligibility Requirements

We get many questions about FHA loans–questions about FICO score requirements, questions about credit and income, residency, etc. The FHA official site (www.fha.gov) has many answers to these questions–but what ARE the basic requirements for an FHA mortgage? FHA loan rules specify a minimum FICO score needed to qualify for maximum financing, and a minimum FICO score for basic eligibility with a larger down payment in cases where the applicant’s FICO score is close to the margins of acceptability. “FHA insures mortgages” the official site says, “made by approved lenders to individuals and nonprofit and government agencies that are approved to participate in HUD’s programs; HUD does not loan money to homebuyers.” The FICO score requirements mentioned previously (580 for maximum financing, and FICO scores above 500 for program eligibility | more...

March 23, 2015

FHA Loan FICO Score Requirements

By Joe Wallace

We get many questions and comments about FHA home loans where FICO scores are concerned. Some borrowers seem to have doubts about whether or not they can qualify for an FHA mortgage loan or refinance loan because of their FICO scores and other financial qualifications. Consider this recent reader comment that came in: “Have a score of 565 & trying to Get A Home Loan.” While there’s no specific question mentioned, it’s easy to see the reader is looking for some kind of information on FHA loan FICO score minimum requirements. Here’s a chart that’s printed in HUD 4155.1 which lays out the minimum required FICO scores needed to get an FHA mortgage: Some who are new to applying for a home loan may wonder what it means to be | more...

March 20, 2015

FHA Loan Questions: Tax Records

By Joe Wallace

A reader asks, “Is an fha requirement for a home buyer to have two years of taxes?” This is a difficult question to answer in general except to say that borrowers should be prepared to include tax information as part of an FHA loan application. The actual requirement can vary depending on lender standards, state law, and whether the borrower is self employed or not. Consider what FHA loan rules found in HUD 4155.1 Chapter Four Section D have to say about self-employed FHA loan applicants, or those who own a family business: “Self employed borrowers must provide –signed, dated individual tax returns, with all applicable tax schedules for the most recent two years –for a corporation, “S” corporation, or partnership, signed copies of Federal business income tax returns for | more...

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

March 20, 2015

FHA Loan Closing Costs

By Joe Wallace

A reader asks, “Is the seller of a home to a buyer that is financing with a FHA loan required to pay the buyers closing costs?” FHA loan rules do not say the seller is required to pay closing costs on behalf of the borrower; in any case the seller’s contribution to the sale whether that is in the form of paying closing costs or other incentives is limited to six percent of the sales price of the property. Here’s a quote from the HUD booklet titled, “Shopping For Your Home Loan” which includes the following under Settlement Costs: “You can negotiate which settlement costs you will pay and which will be paid by the seller. The seller may contribute a lump sum amount or may agree to pay for | more...

March 19, 2015

FHA Loan Credit Requirements For Non-Occupying Co-Borrowers

By Joe Wallace

A reader asks, “Hi i am trying to get a mortgage but have good credit but low income. I was wondering if someone could help me be a non-occupying borrower with bad credit but excellent income a job help, basically use his income not his credit.” FHA loan rules are very specific about non-occupying co-borrowers. This is because there are many different types of circumstances where a borrower may have an occupying non-borrower, or an occupying co-borrower, or in the case of this reader question, a non-occupying co-borrower. Each of these circumstances is viewed slightly differently for several reasons, and there are circumstances that may apply to one type of borrower that don’t apply to another. For example, a spouse who occupies the home but does not borrow; this situation | more...

March 19, 2015

FHA Loan Reader Questions: New FHA Loans After Foreclosure

By Joe Wallace

A reader asks, “my husband property was forclosed on out of his control of his job moving to a different state can we try to by if we havent waited 2 years” This reader question doesn’t provide quite enough information to give a specific answer. FHA loans after a foreclosure are possible, but much depends on whether the borrower had an FHA home loan or not, and the borrower’s credit history following the foreclosure activity. Here’s what FHA loan rules in HUD 4155.1 Chapter Four Section A say about attempting to get an FHA loan after a previous home purchased with an FHA mortgage was foreclosed upon: “If the borrower has had past delinquencies or has defaulted on an FHAinsured loan, there is a three-year waiting period before he/she can | more...

March 17, 2015

FHA Loan Appraisals and Home Inspections

By Joe Wallace

A reader asks, “Just bought a home and while in crawl space installing drain tile I realized the main sewer line was leaking. The house was unoccupied for 2 years prior to purchase. I have an FHA loan and cannot afford to have contaminated soil removed and line repaired. I realize that I made a mistake buying this home but I felt protected from major issues in getting an FHA loan. What can I do?” The most important question in this situation is whether the borrower paid for a home inspection prior to purchase. It can be tempting for borrowers to rely on the appraisal alone to catch problems or issues with a house, but it’s never a good idea to do so. Why? FHA loan rules are clear–the FHA | more...

March 16, 2015

FHA Loan Income Rules: Projected Verifiable Income

By Joe Wallace

We write a lot about FHA loan income rules. When the lender is processing your FHA loan application, your verifiable income is counted against your monthly financial obligations. The lender must review all sources of your income to determine whether those sources are stable, reliable, and likely to continue for a reasonable period of time. Your job and current income is verified by the lender by way of pay stubs and other documentation. But what happens when a borrower has a pay raise or promotion due later on that could positively change the borrower’s debt to income ratio? Can the lender include such projected income in the equation? The rules covering this issue are found in HUD 4155.1 Chapter Four Section E, which says in part: “Projected or hypothetical income | more...

March 13, 2015

Are You Ready For An FHA Loan Application?

By Joe Wallace

Are you ready for an FHA home loan application? If you’ve been considering your options, it’s a very good idea to create a list of to-do items in the preparation time leading up to your application. The first thing to do is to make sure you’re ready for your loan by checking your credit reports and FICO scores. Your repayment history and FICO score play a big part in whether you get approved or denied for the loan. Hand in hand with those factors is the amount of debt you have getting paid every month versus how much income you have. Reducing the amount of debt–especially credit cards and related types of debt–can help your application’s chances. Some borrowers don’t think about saving up for their home loan beyond making | more...

March 12, 2015

FHA Loan Down Payment Rules: Sources Of The Down Payment

By Joe Wallace

We often post about FHA loan preparation time, advising borrowers to give themselves at least 12 months before turning in an application for the FHA mortgage. Part of this is so the borrower can check credit reports, but also to insure that at least 12 months have gone by without the borrower missing any payments on financial obligations. Part of this advice also includes the notion that a borrower not apply for any new lines of credit for the 12 months leading up to the loan application for the FHA mortgage. There are several reasons for this, one of the most important being that new credit opens up the potential for a higher debt-to-income ratio. That higher ration can work against the borrower, especially in cases where the debt to | more...