Articles Tagged With: FHA Loan

February 28, 2017

FHA Well Water Requirements: A Reader Question

What do FHA appraisal requirements have to say about the testing of well water? A reader got in touch with us recently to ask us about well water testing: “Is there an automatic testing of the well required just because it is surrounded by extensive farm land? I know that is required for USDA but wasnt aware that FHA required it. A reviewer is telling me it is in the 4000.1 Handbook and I dont remember seeing that.” The answer to this particular question is addressed in HUD 4000.1 on page 495, but before we get to the specifics, it’s important to point out that FHA loan standards are often not the only ones that must be met in situations like these. The local health authority may require testing of | more...

February 27, 2017

Types of Homes Eligible For FHA Mortgages

By Bruce Reichstein

What kinds of property types can be purchased with an FHA mortgage loan? It’s a simple question, but there are some occasional misconceptions about FHA requirements for single family homes that borrowers should know about as they plan their mortgage. There are rules on eligible property types that can be purchased with an FHA mortgage loan. These rules are found in HUD 4000.1, and include the following guidance to the participating FHA lender: “FHAs programs differ from one another primarily in terms of what types of Properties and financing are eligible. Except as otherwise stated in this SF Handbook, FHAs Single Family programs are limited to one- to four-family Properties that are owner-occupied Principal Residences.” The phrase, “owner-occupied principal residences” is an important one-FHA mortgage loan rules include an occupancy | more...

February 23, 2017

Mortgage Rates: Moving Lower

By Joe Wallace

Mortgage loan interest rates have been moving downwards since our last report, but the moves have been small, and we still see a familiar range of rates. 30-year fixed rate conventional mortgages are still within a best execution range between 4.125% and 4.25%, even after the Fed made statements about future rate hikes. Our sources state that while hikes were mentioned, the information wasn’t quite what was expected and more favorable to mortgage rates (based on investor reaction to the less aggressive news from the Fed). FHA mortgage rates are also hovering in a best execution range between 3.75 and 4.25% at the time of this writing, and it’s unclear whether conditions will bring a return to a sub-four percent FHA rate or not in the short term. In fact, | more...

Can I get an FHA home loan if I owe back taxes?

February 22, 2017

Credit Score Questions

By Joe Wallace

Credit score issues are some of the most popular topics in our comments section-many want to know if their FICO scores are high enough to qualify for an FHA mortgage. One reader asked recently, “(Can) i can buy a (home using) FHA or HUD at a credit score from 500 to 579? With 10% down? How much is 10%?” This reader is referring to a recent blog post about FHA FICO score requirements which included the following: “FHA loan rules state that borrowers with credit scores at 580 or higher are eligible for maximum financing for FHA home loans, which requires a 3.5% down payment from the borrower. For those with credit scores between 579 and 500, 10% down is required.” The short answer to the reader question is that | more...

When Is An FHA Loan Better Than A Conventional Loan?

February 22, 2017

Divorce And FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “I was divorced 5 years ago but he stayed in the house. He is always behind on the payments and it affects my credit. I have divorce papers that state he is solely responsible for the house and payment. Also he was court ordered to get the house in his name but hasnt and the courts wont do anything about it but extend his time. Can I buy a house even though because of his late payments has made my credit score less than 500. How do I handle this?” This reader question should be answered by legal counsel-giving legal advice is outside the scope of this blog, except to recommend that when legal help is needed that it’s best to get the services of someone with | more...

February 21, 2017

FHA Appraisal Timing: A Reader Question

By Joe Wallace

A reader asks us a question about FHA appraisal rules this week in our comments section. “Buyers want my house but dont want to process the sale until the end of April. It is now Feb. 19th 2017. I dont have a problem with that but do want some kind of guarantee that they are going to buy it.” “They are going FHA. Should I ask them to have and pay for an appraisal & inspection now as a good faith issue? If I do hold the house for 2 months I am the only one to suffer if they dont buy. Also who does the appraisal and inspection if the loan is FHA?” As for the timing of the appraisal and home inspection, that would be up to the | more...

February 17, 2017

Gaps In Employment, Reductions of Income: FHA Loan Rules

By Joe Wallace

FHA loan rules in HUD 4000.1 for single family home loans and refinance loans include instructions for the lender on how to verify a borrower’s income and employment. There are several reasons why this verification must be made, but one important one is to insure the income used to qualify for an FHA loan is stable, reliable, and likely to continue. The lender is basically looking for indications that this is so, but how does the loan officer interpret financial setbacks such as gaps in employment or reductions of income? What are the FHA requirements in this area? HUD 4000.1 addresses these issues. For example, when it comes to certain gaps in a borrower’s employment history, the following may apply: “For Borrowers with gaps in employment of six months or | more...

February 9, 2017

FHA Loans: Purchase, Rehab, Refinance

By Joe Wallace

FHA loans are a good option to consider, especially if you are looking for an alternative to the comparatively high down payment requirements of many conventional mortgages. But do you know all of your FHA mortgage options? HUD 4000.1, the FHA single family home loan rule book, describes the basic options borrowers can choose from. FHA loans are not just for new purchases-you can apply for a refinance loan, or you can apply to purchase and rehab a property you intend to live in as your primary residence. HUD 4000.1 describes your FHA loan options starting with the most typical FHA mortgage: Purchase Loans and Construction-to-Permanent Loans “The Borrower may finance the purchase of an existing one- to four-unit residence, and may also finance construction of a one- to four-unit | more...

February 9, 2017

Mortgage Rate Trends: Improving

By Joe Wallace

There are factors that directly affect mortgage loan interest rates, and there are those that work more indirectly. Economic data, breaking news, and sometimes even the overall mood of investors on a given day or in a given week could be factors in which way rates are moving. Right now, investors seem very keen on putting money into less risky avenues (such as bonds), and that is one thing that is helping rates improve this week. We’ve seen an overall downward trend in the last few business days that has resulted in 30-year fixed rate conventional mortgages creeping back towards the bottom part of the range we’ve seen rates hover in since the start of 2017. At the time of this writing, 30-year fixed rate conventional mortgages are at or | more...

February 8, 2017

Second Appraisal For An FHA Loan? The Rules You Should Know

By Joe Wallace

There are times when a borrower or even the seller may not agree with the results of an FHA appraisal. Does the FHA loan rule book, HUD 4000.1, permit the request of a second one? Under what circumstances might another one be allowed? According to page 123 of HUD 4000.1, simply disagreeing with the fair market value determination of the original-likely one of the most common reasons to look into a second attempt-isn’t enough to justify such a request. “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required.” Second appraisals “may only be ordered if the Direct Endorsement (DE) underwriter (underwriter) determines the first appraisal is materially deficient and the Appraiser | more...