Articles Tagged With: FHA Loan

November 7, 2016

HUD Announces Settlement In Illinois Fair Housing Case

A press release on the HUD official site announces that the U.S. Department of Housing and Urban Development has reached an agreement between the East Chicago Housing Authority and a fair housing organization, “resolving multiple complaints of housing discrimination” according to the press release. Acting on behalf residents in the area, the Sargent Shriver National Center on Poverty Law alleged the East Chicago Housing Authority violated the Fair Housing Act, Title VI of the Civil Rights Act of 1964, and Section 504 of the Rehabilitation Act, “with respect to the relocation of residents at West Calumet Housing Complex due to soil surrounding the complex being contaminated with lead and arsenic.” The HUD press release states that, according to the complaint, “the housing authority engaged in discriminatory housing practices in its | more...

November 3, 2016

Septic Systems And FHA Loans: A Reader Question

By Joe Wallace

A reader got in touch recently to ask about FHA home loan rules on septic systems. “FHA loans require 50 to 75 feet min for well and septic to be from each other, is that true? And is there anyway round that being there is going to be putting in city water and sewer in the next 2 years…” FHA requirements governing septic systems can be found in several places in HUD 4000.1, including a requirement for FHA appraisers to be familiar with minimum distance requirements for septic and well placement. Wells and well water quality are very important factors where applicable. HUD 4000.1 states, “The Appraiser must note any readily observable deficiencies regarding the well and require test or inspection if any of the following apply: the water supply | more...

November 1, 2016

Employment: FHA Loan Rules

By Joe Wallace

A reader asks, “I am planning to apply for a home loan, in the next couple months. I am a recent college graduate that has been employed at my current job since May 2016 (just about 6 months). I am planning to buy a house for no more than $110,000, with a $8000 down payment. Will my lack of experience stop me from getting a home loan?” It’s true that in addition to FICO scores and credit history, there are also FHA guidelines for employment and income. In general, FHA loan rules require the lender to either verify two years of employment history or provide alternate documentation of either school enrollment or military service. According to HUD 4000.1, “The Mortgagee must obtain the most recent pay stub and one of | more...

October 31, 2016

Mortgage Rates: Friday Recovery

By Joe Wallace

Since our last report, rates have remained in an upward trend, but Friday saw a bit of relief after a spike on Thursday. Mortgage rates have been moving upward, hitting their highest levels in many months, but they are still below four percent even with the current trend. Some market watchers blame bond market weakness for at least part of this upward trend, but there have been important economic developments abroad (Many have been keeping watch on European Central Bank news) and at home (scheduled economic data releases and news from the Fed) that have also contributed to the current rate environment. Friday rates recovered a bit, reflected in closing costs for many rather than an actual change in the best-execution rates reported here. 30-year fixed rate conventional mortgages are | more...

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

October 26, 2016

FHA Appraisal Guidelines: Heating and Plumbing

By Joe Wallace

FHA appraisal rules are found in HUD 4000.1, which is the rule book for all FHA single family mortgage loans, refinancing, and reverse mortgages. There are some specific instructions where aspects of the appraisal are concerned, including systems found in the home such as heating, cooling, and plumbing. For example, where heating the home is concerned, FHA loan rules begin by stating, “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source.” There may be situations where the heating system installed is not quite up to the task of managing the entire residence. Rules for the FHA appraisal address this directly: “The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS | more...

October 26, 2016

FHA Mortgage Maximum Loan Amounts

By Joe Wallace

FHA home loans feature a maximum loan amount that varies depending on the housing market and other factors. There’s no single set dollar amount that establishes a limit for how much loan the FHA will guarantee, though many housing markets do feature the same general FHA loan limit based on calculations made on a yearly basis. The reason a specific loan limit dollar amount cannot be given is because FHA loan limits are also affected by the loan-to-value (LTV) ratio which may vary in each transaction. This ratio is basically a calculation of the percentage of the loan satisfied by the down payment. With a typical FHA single family forward mortgage, the LTV is 96.5% based on a minimum down payment of 3.5%. HUD 4000.1 discusses maximum mortgage loan amounts | more...

October 24, 2016

Appraisal Rules For FHA Mortgages, Reverse Mortgages

By Joe Wallace

FHA home loans require an appraisal, which is designed to determine the fair market value of the home, but also to insure the property meets FHA minimum standards. While the appraisal must not be considered an inspection (and passing the appraisal is not a stamp of FHA approval or a guarantee that a home is free of problems), the FHA appraiser is required to report problem conditions may be spotted during the process. What does this mean? HUD 4000.1 states, “The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the ability of the property to serve as collateral, and the structural soundness of the improvements.” This is found on page 491, which also adds the following description/definition | more...

October 20, 2016

FHA Refinance Loans: 10 Things To Know

By Joe Wallace

If you are considering your options with an FHA refinance loan, here are ten tips to help you decide which type of refinancing is right for you. FHA Refinancing For Non-FHA Loans Borrowers do not have to be in an FHA mortgage loan already to be eligible for certain types of FHA refinance loans. Your VA loan, conventional, even sub-prime mortgages may be able to be refinanced into an FHA loan. FHA refinance loans feature cash-out and non-cash out options for existing FHA and non-FHA mortgages. Refinancing And Repairs Your FHA refinance loan options include rehab/repair loans under the 203 program. FHA 203(k) and 203(h) mortgages have long been a part of the FHA loan options available from participating lenders. If your home has been damaged in a natural disaster, | more...

October 20, 2016

FHA Requirements, Occupancy, and Business Loans

By Bruce Reichstein

Here’s an example of a question we get fairly often about the intended purposes of FHA mortgages: “I am interested in investing in properties I intend to flip and rent out. I already own a primary residence, can I use a FHA loan to buy a second home for business? FHA loan rules are specific when it comes to flipping a home, starting with the FHA’s definition of the practice as found in HUD 4000.1: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser…Property Flipping refers to the purchase and subsequent resale of a Property in a short period of time..” We are not implying that the reader | more...

October 19, 2016

Mortgage Payments On FHA Loans: How Much?

By Joe Wallace

One of the most common questions about FHA mortgage payments is naturally, “How much will I have to pay?” And the answer is not as easy as you might think since there are a variety of factors that go into calculating the monthly mortgage payment. FHA loan limits, the amount of the loan the FHA will insure, don’t include the Up Front Mortgage Insurance Premium (UFMIP), for example. So you can’t simply divide the amount of your loan limit and divide by the number of mortgage payments you plan to make. In addition to UFMIP, there are other things to consider. For example, is the borrower planning on an FHA Energy Efficient Mortgage (EEM)? This option allows the addition of extra funds for approved upgrades or improvements to the home, | more...