Articles Tagged With: FHA Mortgage Loan

April 27, 2017

An FHA Loan For A Flipped Home?

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...

How much can I borrow with an FHA refinance loan?

April 24, 2017

Are You Ready For An FHA Mortgage?

By Joe Wallace

Are you ready to apply for an FHA mortgage in 2017? There are several areas that borrowers should spend plenty of time examining before filling out paperwork or online forms to apply or get pre-approved for a mortgage loan. Credit Reports If you do not know what your lender will see when she pulls your credit report, there’s a good chance you are not ready to fill out FHA loan paperwork. Why? Because if there are errors on your report, questions over certain accounts that may need to be disputed or contested, evidence of identity theft, those will all need to be dealt with before you apply for your loan. A lender can work with a borrower who has disputed accounts still pending (assuming the lender’s standards permit) but if | more...

April 24, 2017

FHA Loans and Alimony/Child Support

By Joe Wallace

A reader asked a question in our comments section about FHA loan rules for alimony and child support payments: “What is a voluntary payment agreement? I am divorced its a closed case and I actually pay a little more than what we agreed to in the official settlement agreement. Shes now trying to buy a house and will be dealing with the whole proving amount of alimony/child support and its very difficult to amend a closed case.” “If we have an agreement between ourselves for (x) dollars/month for (x) amount of time and have this notarized, would this constitute a voluntary payment agreement?” The reader is referencing an earlier blog post from 2013, which includes the following about how the lender may consider alimony and child support as part of | 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...

What You Need To Know About Your FHA Home Loan

April 13, 2017

FHA Loan Limits: Low-Cost Areas, High-Cost Areas

By Joe Wallace

FHA loan limits can be puzzling to those unfamiliar with how the program works. FHA loans are calculated based upon the appraised value of the property or the sale price, whichever is lower. There are other factors that will help determine the final amount of the home loan including whether approved closing costs have been rolled into the loan, approved energy efficient upgrades, etc. But housing markets vary across the nation. What is an affordable, modest price for a house in one area won’t be enough to purchase property in a high-cost area. So how does the FHA determine what the proper loan amount should be with this factor in mind? HUD 4000.1 has the answers, listing FHA loan limits, and their requirements and loan guaranty limits for low-cost areas | more...

April 5, 2017

Temporary Reduction of Income: FHA Loan Rules

By Joe Wallace

What happens if a borrower fills out an FHA loan application while having a temporary reduction of income either on the record or ongoing during the application process? Does the FHA loan rule book, HUD 4000.1, address these situations? Fortunately, yes. There are many reasons why a loan applicant might experience a temporary reduction of income-short term disability, for example. Maternity leave. Temporary leaves of absence, sabbaticals, etc. According to page 206 of HUD 4000.1, FHA loan rules in this area include the following: “For Borrowers with a temporary reduction of income due to a short-term disability or similar temporary leave, the Mortgagee may consider the Borrowers current income as Effective Income, if it can verify and document that: – the Borrower intends to return to work; – the Borrower | more...

Can I buy a manufactured home with an FHA loan?

April 4, 2017

Commission Income and FHA Loans: A Reader Question

By Joe Wallace

A reader asked about the FHA loan rules governing commission income this week in our comments section: “My employer recently (1yr) switched the pay scale to a base/commission/bonus format. Basically we now get paid per load instead of hourly. Since weve only received commission for 2016 and not 2015, should my itemized job related expenses for 2015 count against my income over the previous two years?” FHA loan rules in HUD 4000.1 address this issue, but may not be the only rules at work-lender standards would also apply as well as any applicable state law. Here’s what HUD 4000.1 states about commission income: “The Mortgagee must calculate Effective Income for commission by using the lesser of (a) the average net Commission Income earned over the previous two years, or the | more...

April 3, 2017

FHA Loan Amounts: A Reader Question

By Joe Wallace

What are the minimum FHA loan amounts? A reader asked us a question in the comments section along those lines recently: “Is there a minimum amount for FHA Loans? Someone told me you have to borrow at least $90,000. Does the loan depend on your annual income?” FHA mortgages are not approved or denied based on the dollar amount of your annual income, but rather on your ability to afford the loan based on your financial obligations (including an estimate of your monthly mortgage payment) compared to your monthly income. Your debt-to-income ratio is more important in the loan approval equation. When it comes to FHA loan amounts, the minimum loan is based on the appraised value of the property or the asking price, whichever is lower. The FHA loan | more...

March 20, 2017

FHA Loan Rules For Employment: A Reader Question

By Joe Wallace

FHA loan rules require the lender to verify a borrower’s employment-how long the borrower has been employed, the nature and duration of the job, the pay, and other factors that may be required by lender standards or state law. Sometimes it is easy to misunderstand these requirements, but many simply don’t know what the lender is looking for when verifying a borrower for an FHA mortgage loan. One reader got in touch with us to learn what the FHA loan rules are for employment, asking, “What is the required period of employment for FHA?” HUD 4000.1 provides the answer, stating: “For all Employment related Income, the Mortgagee must verify the Borrowers most recent two years of employment and income, and document using one of the following methods” which include “traditional” | more...

March 16, 2017

FHA Loan Assumptions: A Reader Question

By Joe Wallace

How do FHA loan assumptions work? There are many situations where assuming another borrower’s FHA mortgage could be beneficial to all involved. Consider this reader question we responded to recently: “My mother in law took out an FHA loan due to illness preventing her from working. The lender allowed myself and fiance to make payments on her behalf based on our income in order for her to keep the house. Is it possible for her to sign the house over to us since her health is declining?” This is a circumstance where it would definitely help to know about FHA loan assumptions and how they work. The rules for this procedure is found in HUD 4000.1, which starts off with a definition. “Assumption refers to the transfer of an existing | more...