Articles Tagged With: FHA Loans

How much can I borrow with an FHA refinance loan?

May 5, 2017

Old Credit Problems And FHA Loans

Do old credit problems come back to haunt you later when you fill out an home loan application? That’s basically what one reader asked us in the comments section this week: “If (a) charge-off was from a student loan account a decade ago that was delinquent, but paid in full from a tax-return offset six years ago, how is this viewed?” The reader is referencing some information we mention in a previous blog post, FHA Loan Standards: Charge-Offs and Collections, which includes the following information on how FHA loan rules instruct the lender to handle charge-off information found on a borrower’s credit report. The post includes a definition of what the FHA calls a charge-off account. “Charge Off Account refers to a Borrowers loan or debt that has been written | more...

May 4, 2017

Part Time Income: FHA Loan Rules

By Joe Wallace

What are the rules for using part time income to qualify for FHA loans? A reader asked us a question on that topic in our comments section this week: “I have a client that worked full time for a company for eight years. In the last eight months he went to half time. Why cant we use this income since hes been at the same employer for more than 2 years?” Instructions to the lender on this issue are found in HUD 4000.1. There, we learn that for all income sources, the lender is required to do some calculations. “For employees who are paid hourly, and whose hours do not vary, the Mortgagee must consider the Borrowers current hourly rate to calculate Effective Income. For employees who are paid hourly | more...

May 3, 2017

Commuting Distances and FHA Loans

By Joe Wallace

Do commuting distances affect your ability to get an FHA mortgage? A reader asks, “I work in New Jersey and have been employed with my company for over over 20 years. Since the type of work I do I can work from home I want to move to NC. I will still be employed with my job.” “The only stipulation with my job is I have to come to NJ for 6 weeks out of the year (not all at once) which I have no problem doing. Will I still be able to obtain an FHA loan?” FHA loan rules in HUD 4000.1 do address commuting distances, but not all circumstances can be anticipated with the rules. In many cases FHA loan rules defer to other regulations where appropriate. In | more...

Can I buy a manufactured home with an FHA loan?

May 3, 2017

Work Absences And FHA Loans

By Joe Wallace

Can FHA loans depend on a borrower not having medical leave or temporary absences from work? That’s what one reader wants to know this week: “I was out from work one month do to a job related injury. Can I get an FHA loan? How long I have to wait to qualify? I have been working for the same company three years.” FHA loan rules may be non-specific on certain types of circumstances, preferring to defer to state law, lender standards, or other guidelines. However, this situation is not one of those. HUD 4000.1 specifically addresses the issue of temporary absences from the applicant’s place of employment. HUD 4000.1 describes this as a “temporary reduction of income”, stating: “For Borrowers with a temporary reduction of income due to a short-term | more...

May 1, 2017

FHA Loan Questions: Verifying Alimony and Child Support

By Joe Wallace

FHA loan questions often come in our comments section after we’ve posted on a certain topic. Recently we wrote about how a lender is supposed to verify child support and alimony payments to a borrower who wants to use them as income: “I applied for a loan and my loan officer said I need proof of continuing payment for the next 3 yrs because my oldest son is 16 but will not graduate high school until after he turns 19. Would my court ordered support papers, my sons school records showing graduation year, and a copy of the law stating that he has to pay until he graduates be good enough proof?” FHA loan questions like these are proof that there’s still much work to do on explaining how FHA | more...

April 28, 2017

Fair Housing Month And HUD

By Joe Wallace

Fair Housing Month ends this weekend. This month-long campaign to raise awareness of Fair Housing laws is an important one, which includes measures taken by the Department of Housing and Urban Development to help house hunters and apartment seekers alike to get fair consideration when applying to find or buy a home. Those measures in 2017 include a trying to raise awareness of certain persistent types of discrimination. According to the HUD official site, one version is particularly troublesome. “Every type of discrimination robs individuals and families of their right to choose where to live, but one form of discrimination HUD is particularly active in addressing is discrimination against families with children, known as familial status discrimination.” HUD states that every year, more than ten percent of all Fair Housing | more...

April 27, 2017

An FHA Loan For A Flipped Home?

By Joe Wallace

Is a flipped home eligible for an FHA mortgage? That’s what one reader wanted to know this week. “What are the rules for buying properties that have been ‘flipped’ meaning an investor/homeowner has purchased the property did some updates and are now attempting to sale the property.” “Are there any sort of timing requirements (i.e. a buyer cant buy before 6 months after seller has purchased property)? Also, is there any sort of maximum markup on the price the investor is attempting to sale for on the property?” FHA loan rules in HUD 4000.1 are clear on this issue. According to page 146 of HUD 4000.1, “A Property that is being resold 90 Days or fewer following the sellers date of acquisition is not eligible for an FHA-insured Mortgage.” There | more...

April 21, 2017

Down Payment Assistance and FHA Loans

By Joe Wallace

A reader got in touch this week about a question related to down payment assistance for FHA mortgages. “I’m buying a home for 175,000. I’ve been cleared to close. Ive been approved for $30,000 down payment assistance which has covered all my down/closing fees.” “A day before closing the FHA is saying I still need to pay 3.5% of the purchase. Is it still required? I thought with FHA at least $1000 earnest money was enough. I had $30,000 already approved.” Answering this question is difficult for two reasons-we don’t know the specifics of the gift funds, and whether those funds were actually considered down payment assistance or contributions toward closing costs. There is a big difference between down payment assistance funds, and funds contributed to closing costs. FHA loan | more...

April 20, 2017

FHA Appraisal Rules: Basements

By Joe Wallace

A reader asked us an appraisal question in our comments section recently about unfinished basements. “We were conditionally approved for FHA. There were two items in to be completed in the FHA appraisal before closing. Finish flooring in bedroom (completed).” “The room was being completely redone And, 2. Finish bathroom in basement. This is an unfinished basement with framing and partial drywall. The rough bathroom has the toilet and sink installed. My question is: Does a basement need to be finished for FHA approval? From what I have read, the basement is not calculated as living space.” While it is true that FHA loan rules in HUD 4000.1 mention not counting the basement as part of the Gross Living Area, FHA appraisal rules are not the only ones which may | more...

April 18, 2017

FHA Loans And The 100 Mile Rule: A Reader Question

By Bruce Reichstein

A reader asked us a question about FHA loans and “the 100 mile rule”. “I am currently looking to purchase a home with FHA financing 5 miles from my current home in California. The current home I own is secured with a conventional loan. I would like to rent this home out and buy a larger home and finance it FHA because I dont have very much saved up for a larger down payment. Does the 100 mile rule apply to me?” The reader is asking in response to a post we made earlier this year about military FHA borrowers and occupancy rules for FHA loans. This quote from that original post, referencing FHA loan rules in HUD 4000.1, seems to be the issue of most concern for the reader: | more...