Articles Tagged With: FHA Loan Rules

September 9, 2014

FHA Loan-To-Value Ratios, Down Payment Requirements

FHA loans are different than conventional loans for a variety of reasons, including the amount of the down payment required. The comparatively lower down payment for FHA loans is one of the biggest advantages–borrowers who have to budget for a smaller down payment have more money to use in other areas of the FHA loan such as the fees for appraisals and compliance inspections. One important question on the minds of many borrowers involves how much the FHA will guaranty on the loan, what the down payment on that amount might be, and how these numbers are calculated. The maximum amount of the FHA loan is different than the maximum amount the FHA will guaranty on the loan. The borrower and lender could theoretically agree on a loan amount higher | more...

September 8, 2014

FHA Home Loan Advice: “Shop Before You Buy”

By Joe Wallace

The FHA official site, www.FHA.gov, has links to helpful videos that can instruct those new to the FHA mortgage loan program. One of those videos produced by the FHA/HUD is titled, “Shopping For Your Home” and offers some expert insights into how to make the best choices in the FHA loan process. One bit of advice the FHA offers is that borrowers can benefit by taking advantage of the option to get a referral to an FHA/HUD approved housing counselor. Borrowers who do this early in the loan planning process can save themselves time and even money thanks to the advice of the housing counselor. Borrowers will learn through the video what it takes to determine how much home you can afford by using a mortgage loan calculator. The video | more...

September 4, 2014

FHA Loan Rules: Verification Of Employment

By Joe Wallace

When you apply for an FHA mortgage, your lender will need a variety of documentation from you about your income, assets, debts and employment. In fact, employment verification is one of the major steps in the FHA loan approval process. But how does your lender verify you are working with a current employer? According to the rules printed in HUD 4155.1, the lender will require a current pay statement and a written Verification of Employment (VOE). Not all FHA loan applicants may be able to furnish a written VOE, so the FHA loan rule book lists some acceptable alternatives. Chapter One, Section B states: “As an alternative to obtaining a written VOE, the lender may obtain the borrower’s • original pay stub(s) covering the most recent 30-day period, and • | more...

September 2, 2014

FHA Loans: Appraisals Versus Inspections

By Joe Wallace

A reader got in touch recently with the following: “I recently purchased a home with foundation issues. It was not required of me to get a home inspection buy the realtor. However it was required of me to get an appraisal by the realtor.” “It is unfortunate for me that I could not be there during the time of the appraisal, the real estate agent was there . It is also unfortunate for me that I did not survey the garage where the damages exist. Is it proper for a licensed real estate agent to sell property without disclosing foundation issues? I also got an FHA Loan to purchase this property.” It is true that FHA appraisals are required, and home inspections are not. However, no borrower should purchase a | more...

August 28, 2014

FHA Mortgage Rate News For Thursday August 28 2014

By Joe Wallace

FHA mortgage loan rates have been lower this week in small increments, and while many borrowers could see the difference in rates reflected in their closing costs rather than the actual rate number itself, the move lower does benefit the borrower. Mortgage loan rates in general have approached their lowest levels of the year (best execution), and we’ve seen movement both upward and downward this summer only in a narrow range. The causes of this summer’s rate changes are varied, including breaking financial news from Europe. Add to that investor reaction to the Ukraine crisis, plus the situation in Gaza. At home, bond auctions, economic data releases such as the GDP and Employment Situation Report and other financial information have also influenced rates within the narrow range we’ve seen all | more...

August 26, 2014

FHA Streamline Refinance Loan Rules: A Reader Question

By Joe Wallace

A reader asks, “I currently have an FHA loan that I have had for 5 years and would like to streamline,but the maximum loan amount has changed since I got the loan and the new limit is less than what I owe. Does the new limit apply to streamline loans as well as new loans?” The FHA and HUD issued some guidance back in 2013 to clarify the rules for maximum loan amounts for FHA Streamline Refinancing. According to Mortgagee Letter 2013-29, the following clarification affects how the maximum amount is calculated, and what can be included in the loan amount when calculating that maximum. “Mortgagees are reminded that when processing an FHA-insured streamline refinance mortgage, the new maximum mortgage amount must always be calculated starting with the outstanding principal balance on | more...

August 25, 2014

FHA Loan Down Payment Rules: A Reader Question

By Joe Wallace

A reader asks, “Without having the 20% down on a property at the purchase of a home, can the loan be refinanced, to achieve the 20% in a short time period less than 3 years?” It’s not entirely clear what the reader is getting at in this question, but in general, FHA loan requirements include a minimum down payment of 3.5% which must be paid on or before the loan’s closing date. This is known as the “minimum cash investment” and is non-negotiable. It must be paid up front. Some lenders may, depending on circumstances, require a larger down payment as a condition of loan approval. This may be due to credit issues which require the loan to have “compensating factors” which can include a down payment of more than | more...

August 22, 2014

FHA Mortgage Rate News For Friday August 22 2014

By Joe Wallace

If you are looking for an FHA home loan, chances are good you are paying attention to the rise and fall of FHA mortgage rates. There are many reason why these rates can change day to day or week to week. One factor—economic data releases that suggests weakness in the economy. This data can influence rates and push them lower, or, conversely, when economic/jobs data indicates improvement, rates can and sometimes do move higher as a result. But other factors can push rates higher or lower, too. We found a good example of that recently–mortgage rates moving lower based on investor reaction to world headlines. Last Friday, mortgage rates hit their lowest levels in the last eight weeks or so. That drop in rates was attributed to how investors reacted | more...

August 21, 2014

FHA Loan Rules For Verifiable Income: Retirement Pay and Social Security Benefits

By Joe Wallace

When applying for an FHA loan, many borrowers want to know if certain types of income will count towards their debt to income ratio. The debt to income ratio is calculated by the lender using income that qualifies according to the loan rules spelled out in HUD 4155.1. Not all income can be used–some types of income are not verifiable because the income isn’t considered stable, reliable, or likely to continue. But what does the FHA loan rulebook say about retirement pay and Social Security income? When it comes to retirement pay, the lender is required to document the income and its source. There’s also a consideration as to how long that pay might continue according to HUD 4155.1 Chapter Four Section D, which states: “Retirement income must be verified | more...

August 19, 2014

FHA Loan Rules: Qualifying Commission Income

By Joe Wallace

There are many questions about who can qualify for an FHA mortgage loan. One type of question involves whether FHA rules have a minimum income requirement (they do not) and other types of FHA loan questions involved what kind of income may qualify for an FHA mortgage. FHA loan applicants who earn some or most of their income through commissions do well to ask these sorts of questions–what do the FHA loan rules say about commission earnings? The FHA loan rulebook, HUD 4155.1, spells out the requirements for verifiable commission income. If income is declared verifiable, it may be counted towards the debt to income ratio your lender will calculate when processing your loan. HUD 4155.1 Chapter Four discusses commission income as follows: “Commission income must be averaged over the | more...