Articles Tagged With: FHA Loan Rules

June 27, 2014

FHA Loans For Schoolteachers: A Reader Question

A reader asks, “My daughter is a schoolteacher. Where she lives, they do not give new hires full time jobs, but hire the teacher part time all the time so they do not have to give benefits. Can she get an FHA loan? Her total need would be $400,000 for the house less a 20% down payment, which she has. She has been working for a long time under this arrangement, but is not classified a a full time teacher. Her mother or I could co-sign for her if necessary. We are both retired but have verifiable incomes and property well in excess of the total loan amount.” FHA loan rules permit co-signers, non-occupying co-borrowers and other arrangements, so the answer to this question where that is concerned is that | more...

June 26, 2014

FHA Loans For Second Homes? A Reader Question

By Joe Wallace

A reader asks, “I would like to know how hard it is to get a loan on buying a second home. Our credit scores are 649 and 685. Before anyone runs our credit again, my husband makes 2000 a month plus we get SS of 2500 a month.” The answers to this reader’s questions depend greatly on a number of factors not mentioned in the question. First there’s the question of the first home–is there an existing FHA mortgage? FHA loans for new purchase transactions require occupancy and borrowers are not permitted to apply for FHA loans for homes they don’t plan to occupy as their full time residence. FHA loans for single-family homes are intended for borrowers to purchase for their own occupancy and an FHA single family mortgage | more...

June 25, 2014

FHA Refinance Loans and HELOC: A Reader Question

By Joe Wallace

A reader asks, “We have an old home built in 1924 in Vallejo, CA. We took a HELOC on the property in 2006 when the home appraised at around $450000. The loan was structured as 10 yrs. interest only payments, which will become principal and interest at the then current HELOC rate in Oct. of 2016. “The home is now worth about half of its prior value, and we are worried about what the HELOC rate will become in 2016. We still owe $244,000 and a house around the corner sold for $235,000. Is there an FHA loan we can qualify for to help get out from under this situation? We have excellent credit(over 760 each)and income around $120000 annually, with no debt other than this HELOC situation.” FHA loan | more...

June 24, 2014

FHA Appraisal Rules For Foundations: A Reader Question

By Joe Wallace

A reader asks, “We are up for a FHA refinance and the appraiser noted that we have a crack in our foundation. We have never had water in the basement ever and it hasn’t moved since i originally purchased the home. We are waiting to hear back from our lender. What is the likelihood this loan will be denied?” There are several issues that apply in a situation like this including the severity of the foundation problem. Not knowing that specific information makes it hard to know which way the call might go but it’s impossible to speculate what one financial institution might do. But that’s not the most relevant issue at work here. State or local building code may address the foundation issue specifically. If the home is not | more...

June 20, 2014

FHA Issues Clarifications On HECM Loan Rules

By Joe Wallace

FHA Mortgagee Letters are issued from time to time from the FHA/HUD to clarify policies, set up new rules, or prepare borrowers and lenders for changes in the FHA program as dictated by law or other means. Two new FHA Mortgagee Letters were issued recently that discuss changes to the rules and regulations covering the FHA’s Home Equity Conversion Mortgage loan program (HECM). There are some important changes that affect the HECM program’s basic design and options for qualified borrowers, plus clarification on how the HECM program may be marketed and warnings against deceptive advertising or marketing practices. One of the most important changes to the FHA HECM program announced by the recent Mortgagee Letters involves limitations to fixed interest rate HECM loans. According to FHA Mortgagee Letter 2014-11: “FHA | more...

June 18, 2014

FHA Loan Rules For Chapter 7 Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “Upon filing Ch 7 we never missed a payment. The problem we had was several years ago when CC companies raised their minimum payments and interest rates. We payed these increased payments for years until we knew we were going too run out of money.” “We filed because we were literally using CCs to live. Make a CC payment only to use the credit for Food and Gas. My credit score went down a little but still around 680. It has been a year since discharge. With OK credit score and always making payments before and after Ch 7, Do we still have to wait another year to buy a home? We have a Home but would like to move from a townhouse to a house.” FHA | more...

June 11, 2014

FHA Loan Questions: Documents Required For Loan Approval

By Joe Wallace

There are sometimes questions about the nature of FHA loan application requirements. Some feel that the loan requirements are “intrusive” or are asking for too much personal data. Part of this sentiment comes from a lack of understanding of what the lender is required to do and provide under the rules of the FHA loan program. What does the FHA require of the lender in order to get a loan approved? Keeping in mind that a home loan is a major line of credit, it’s not surprising that the rules for income and employment verification, credit history and other things are more stringent than for smaller lines of credit like a credit card or cell phone account. For starters, the FHA requires all documentation to be current or at | more...

June 6, 2014

Adding Solar Energy Installation Costs To An FHA Loan

By Joe Wallace

When you’re purchasing a home with an FHA mortgage loan, it may be necessary to add improvement or upgrade costs to the loan amount, depending on the circumstances. The FHA has specific rules that govern this practice–for example, no costs incurred before the appraisal can be added to the loan. HUD 4155.1 has the rules that cover these extra costs. For example: “The repair and improvement amount that may be added to the sales price before calculating the maximum mortgage amount is the lowest of the • amount that the value of the property exceeds the sales price • appraiser’s estimate of repairs and improvements, or • amount of the contractor’s bid, if available.” FHA loan rules in the same section also state that, “The mortgage amount may be increased | more...

June 5, 2014

FHA Loan Reader Questions About Credit Issues

By Joe Wallace

In response to one of our earlier posts, FHA Loan Credit Report Rules, a reader asks, “So if you have bad credit you can’t get approved by FHA? I thought the whole point of FHA was to help people with credit issues buy a home….” The key to understanding the FHA loan program’s requirements in this area is to know what the FHA loan rulebooks says about credit in general, and creditworthiness of the FHA loan applicant. According to HUD 4155.1, Chapter One, Section A, the lender or underwriter is responsible for making sure the loan applicant is able to repay the loan and willing to do so based on credit scores, credit history and related factors: “The purpose of underwriting is to • determine a borrower’s ability and willingness | more...

June 4, 2014

FHA Loans For More Than One Borrower: A Reader Question

By Joe Wallace

A reader asks, “I would like to know if my mother and i can get a loan together, as i will be getting a divorce and she wants to move from her current residence, so we thought we could split the payments as we would rather not rent.I work full time as an LPN and she is on social security. My age is 54 and she is 76 (very good health).” FHA loans do permit more than one borrower. There are different situations where these borrowers are permitted including those where both applicants would occupy the home together and those where one applicant would be considered a “non-occupying co-borrower”. In the case of this reader question, FHA loan rules require both applicants to qualify for the loan. That means both | more...