Articles Tagged With: FHA Loan Rules

January 7, 2015

FHA Loan Eligibility: A Reader Question

A reader asks, “I have just started building my credit I have never had credit before in the past but do now I checked my score and it’s a 680 I do have two credit cards and my payments have always been paid on time.” “I don’t know much about credit but I’m very interested in buying a home I am self-employed I have a store in New Bedford for the past 9 years I also rent the apartment upstairs from my store just wondering would I be eligible for finance a foreclosed home with an FHA loan now I’ve had my credit for a year now…” When applying for a home loan, a participating lender will likely be looking for a credit score of 620 or better and one | more...

January 7, 2015

FHA Loan Rules: FICO Scores

By Joe Wallace

Many FHA loan applicants want to know what the FHA loan minimum FICO score requirements are, but did you know that FHA loan standards are only part of the equation? The lender will also have minimum FICO scores as a requirement–these minimums may match the FHA standards or exceed it. In many cases a borrower will find the lender has more stringent standards than the FHA. What are the FHA minimum FICO score requirements? The rules for FICO scores on FHA new purchase home loans and refinance of those loans can be found in HUD 4155.1, which gives instructions to lenders on how to process FHA loans. That table above is reprinted from HUD 4155.1, and as you can see, FICO scores of 580 and above are technically eligible for | more...

January 6, 2015

FHA Loan Rules: New Loans Following Short Sales

By Joe Wallace

A reader asks, “How long is the waiting period after a short sale?” There are two standards that may apply. One is the lender’s standards which may or may not go beyond FHA minimum requirements. For that you would need to discuss your situation with a loan officer. But the FHA minimum standards are very clearly defined in FHA Mortgagee Letter 09-52, which begins by saying: “Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to • take advantage of declining market conditions, and • purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.” That said, borrowers may be eligible for a new FHA loan without a minimum wait time (according to | more...

January 5, 2015

FHA Loan Mortgage Insurance Refunds: A Reader Question

By Joe Wallace

A reader asks, “I like to know why FHA MIP don’t send any refund after pay off of my FHA loan pay off 4 months ago.” FHA borrowers may or may not be eligible for a mortgage insurance premium refund depending on circumstances, but assuming the reader is eligible for a refund, consider the advice found on the FHA official site at www.FHA.gov: “If you do not receive a check or an application within 45 days after you have paid off your loan, check with your mortgage company to confirm that they have sent HUD a request to terminate the mortgage insurance on your loan. If they confirm that the correct termination information was sent, contact HUD. If you do not receive a refund or any other documentation from HUD | more...

January 5, 2015

FHA Loan Reader Questions: Zero Down Payment Home Loans

By Joe Wallace

A reader asks, “I am wanting to know the best way for me to purchase a house with no down payment. Many years ago had a home through an FHA loan, due to divorce we resolved the case. I found a home I would like to have in the country posey road, 5 acres, nice home all new flooring, simple but a very nice home.” “Can you tell me how to go about getting a loan with no down payment and how I can see if you can consider the home I want meets your requirements etc. I’m on Medicare/disabled with an income.” HUD 4155.1 Chapter Five Section B directly addresses this reader question, assuming the question is about FHA loans in general. We can’t speak to non-FHA mortgage loans, | more...

January 2, 2015

FHA Appraisal Rules: A Reader Question

By Joe Wallace

A reader asks, “My husband and I were just approved for a FHA loan or a RD loan, but we are being told the house doesn’t qualify because the basement only has small windows (no step outs and no door leading outside). The basement contains two bedrooms, a living room and a laundry room. Is there anyway to modify the basement to ensure the house qualifies?” The FHA appraisal would recommend corrections or repairs in such cases based on FHA minimum property requirements and/or state/local building code. Much depends on building code requirements for your state or local area. Borrowers who find themselves in these situations would need to consult the local authority to see what is required there-the FHA doesn’t keep records of all state or local building code | more...

December 30, 2014

FHA Sets New Foreclosure Sales Policy

By Joe Wallace

The FHA and HUD have updated policies related to the sales of foreclosed homes for “all defaulted FHA insured mortgages” with sales scheduled on or after 1 February 2015. According to Mortgagee Letter 2014-24, Increasing Use of FHA’s Claims Without Conveyance of Title (CWCOT) Procedures, the following guidelines will apply to those home sold after the date mentioned above: “Unless otherwise required by statute or jurisdiction, mortgagees are to use the Commissioner’s Adjusted Fair Market Value (CAFMV) for all foreclosure sales and Post-Foreclosure Sales Efforts associated with defaulted FHA insured mortgages when all of the following criteria are met: A.The FHA mortgage insurance is still active for the FHA Case Number; B. The FHA-insured loan is not subject to indemnification. (Note: Items A and B may be verified by checking Neighborhood Watch); C. | more...

December 29, 2014

FHA Loan Eligibility: A Reader Question

By Joe Wallace

A reader asks, ” I bought a home back in 97 I was in the military at the time and in 1999 it went for a short sale and unfortunately they charged my entitlement to my certificate of eligibility $36,000 I got screwed they said they were saving me from foreclosure but in reality I sold the house for more than what I bought it for but now they say I owe that money to get my COE reinstated.” “So that’s why I am now considering using a FHA home loan. My question to you is would I be eligible for the 3.5% down payment with a credit score of 650 and a discharge BK over 2 years its actually 2 1/2 years.” The FICO score portion of this question | more...

December 26, 2014

FHA Loan Reader Questions: Principal Reduction

By Joe Wallace

A reader asks, “I am owner/occupant of a 4 unit residential apartment Bldg which I built 37 years ago. it was successful until wacancies took over after the crash, I have funded the payments with my cash flow but it is now getting lower and lower and need my 6% reduced to the 3% rates with help i a small principal reduction.” This falls far outside the FHA single-family home loan program. The reader doesn’t indicate in the question whether the original loan was an FHA-guaranteed mortgage or not, but in any case, a borrower who seeks a principal reduction needs to work with the lender to see if this is possible. A refinance loan option may be possible depending on the circumstances and the lender, but again, this is | more...

December 23, 2014

FHA Loan Reader Questions: Credit Scores for Co-Borrowers

By Joe Wallace

A reader asks, “Hi wanted to know if my gf has income and a co signer or co borrower can see be able to get an FHA loan if her credit ain’t high but the co person is high.” The answer to this question may depend greatly on the lender, the circumstances, and whether the borrower has compensating factors that might offset a lower FICO score. FHA loan rules spell out minimum credit scores and the lender will also have minimum credit score requirements which must be met. The FHA loan rulebook, HUD 4155.1 in Chapter Four has rules which spell out some standards for credit for all applicants, co-borrowers, etc. Chapter Four says in part: “If a credit score is available, it must be used to determine the decision | more...