Articles Tagged With: FHA Loan Rules

August 18, 2014

How Long Are FHA Appraisals Valid? A Reader Question

A reader asks, “Our home was on the market, the buyer got an FHA Appraisal, their financing fell through yesterday, the appraisal was done last week, Will the new buyer who is FHA also have to get a new appraisal or can the first one be used since it has only been two weeks?” FHA loan rules covering appraisals are found in HUD 4155.1, which states: “FHA appraisals on existing properties are valid for six months. However, appraisals cannot be reused –during the six month validity period once the mortgage for which the appraisal was ordered has closed, or –for a subsequent refinance, even if six months have not passed.” Re-use of an FHA appraisal is specifically addressed in the FHA loan rulebook when it comes to refinance loans: “A | more...

August 15, 2014

FHA Loans: Can The Seller Pay Closing Costs?

By Joe Wallace

There are plenty of expenses related to buying a home that house hunters need to save up and/or budget for–loan fees, appraisal expenses, certain types of insurance, even moving expenses should be factored into the equation. But can the seller pay some of these costs on an FHA loan to make the sale more attractive to the borrower? This is a common question among many first-time home buyers and sellers. The answer is yes–but on a limited basis as defined in the FHA loan rulebook. FHA loan rules don’t allow sellers to contribute more than a total of six percent of the sales price of the home without there being a dollar-for-dollar reduction in the loan amount based on the contribution above that six percent. What’s more, FHA loan rules | more...

August 14, 2014

FHA Loan Credit Report Rules

By Joe Wallace

When an individual borrower applies for an FHA home loan, the lender needs his/her employment data, pay stubs, and tax information. The lender will also pull copies of the applicant’s credit reports. But what happens when two people apply for the FHA loan together? FHA loan rules are clearly spelled out for the lender when it comes to credit reports. HUD 4155.1 Chapter One Section C has instructions for the lender that include the following: “A credit report submitted with a loan application must contain all credit information available in the accessed repositories. Additionally, for each borrower responsible for the debt, the report must contain all of the information available in the credit repositories pertaining to • credit • residence history, and • public records information” But the most important | more...

August 13, 2014

FHA Loan Employment History Rules: The Basics

By Joe Wallace

We get many questions on a regular basis about the FHA loan program’s rules for employment. Is there a minimum required employment time a borrower must have in order to qualify for an FHA mortgage? The FHA loan rules for employment are found in HUD 4155.1. In Chapter One, Section B, we learn the following: “The lender is required to verify the applicant’s employment history for the previous two years. However, direct verification is not required if all of the following conditions are met: • the current employer confirms a two-year employment history (this may include a pay stub indicating a hiring date) • the lender only uses base pay (no overtime or bonus pay) to qualify the borrower and • the borrower signs Form IRS 4506 or Form IRS | more...

August 11, 2014

FHA Loan Employment Rules: A Reader Question

By Joe Wallace

A reader asks, “I am currently living if Florida and wish to try to get an FHA to buy a home in Illinois when I return there next year. I am a nurse and I have heard you must be employed for same employer for at least 1 year to be eligible for FHA loan. Since I will be moving back to Illinois will I have to wait 1 year after I move to apply?” FHA loan rules covering the reader’s employment history question can be found in HUD 4155.1, Chapter Four, Section D under the heading, “Stability of Income”. That section states clearly: “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, | more...

July 29, 2014

FHA Loans, Tax Liens, and Other Credit Issues: A Reader Question

By Joe Wallace

A reader asks, “I’m trying to get my credit re established after a BK in 2011…3.5 years thus far. I’ve had a 12 month secured loan at my credit union, and I’ve had a non secured card for just over 1 yr now, with 2 credit line increases to 2 k in 1 year of payments.” “Also trying to pay off, and get a federal tax lien withdrawn of 9 k to help better score in the meantime. The back tax will be paid in full by Dec 31 -2014…and I’m currently in the direct debit acct, so in 3 months they will withdrawn the lien automatically…After all this projected prep,…what else do I need to get in order by early 2016? to smooth sail for the FHA?” Depending on | more...

July 25, 2014

FHA Loan Rules For Refinancing and Reverse Mortgages: A Reader Question

By Joe Wallace

A reader asks, “We were told to get a reverse mortgage, while applying for a reverse mortgage my husband was under the impress that we did not have to make a mortgage payment. He did not make 2 payments. We have never misses a payment including the 28 years we owned our first home. The person who recommend the reverse mortgage did not explain. explain the process to us, once the paper work was competed he told us that we had to pay 85 thousand dollars in order to get a reverse mortgage, which came as a shock to us and since we could not afford it we dropped out of the program.” “Now we need to defiance as our mortgage is $1250. a month and our condo fee is | more...

July 22, 2014

FHA Loans And Escrow Requirements: A Reader Question

By Joe Wallace

A reader asks, “I am trying to cancel my escrow acct. with (my lender) due to them selling my Mortgage loan to an undesirable finance company called (name deleted). I was informed that all FHA loans are required to have an Escrow account. Please inform me of my rights.” FHA loan rules do not require an escrow account in every case, but your lender might. According to the FHA/HUD official site, we find the following on the page titled HUD RESPA FAQs. The Real Estate Settlement Procedures Act, also known as RESPA, governs escrow accounts for home loans. Under RESPA there is no requirement for escrow. From the HUD official site: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must | more...

July 21, 2014

FHA Loan Rules For Credit, Short Sales, Foreclosures: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are looking to potentially buy a manufactured home already on some land. The home itself appears to meet the requirements stated above. The mortgage loan officer is stating that we do not qualify for a loan for a manufactured home due to my husband having a foreclosure seven years ago and I have a short sale three years ago. Is this correct, that due to our prior home financing circumstances, we are ineligible for an FHA loan for a manufactured home?” The important thing to keep in mind with regard to questions like this is that FHA loan rules aren’t the only ones that govern the FHA loan transaction–lender standards also play a part. FHA loan requirements for credit and other financial qualifications | more...

July 18, 2014

FHA Loans In Community Property States: A Reader Question

By Joe Wallace

A reader asks, “We have applied for an FHA loan. We live in Texas and my husband has a qualifying score to be approved along with the income. My question is that I have prior to marriage collection accounts and my income along with my credit score cannot be used as my credit score isn’t high enough. Collection accounts are prior to marriage and we have no debt incurred during our marriage.” “We were married in October 2012. My loan officer has stated that my debt prior to marriage will not be included with my husband’s debt to income ratio as it violates Texas state law. TX is a community property state and debt is only to be split within the time of the marriage and not prior. Is it | more...