Articles Tagged With: FHA Mortgage Loans

August 19, 2024

FHA Loan Down Payment Rules

One of the biggest worries for some borrowers interested in buying or building a home? The down payment. At the time of this writing, there are not many zero-down payment mortgages offered nationally by participating lenders offering government-backed mortgages; they include VA mortgages and certain USDA single-family home loans. USDA home loans are need-based mortgages with income caps and purchase price limits; VA mortgages are only for those with qualifying military service and certain surviving spouses of those who have died due to military service. There is no need-based requirement for FHA mortgages, and you do not have to be a veteran or a first-time home buyer to apply for one. FHA loans are offered to all who financially qualify, with no income limits. FHA down payment rules include a | more...

February 2, 2024

FHA Home Loan Down Payments

By Bruce Reichstein

Most home buyers will make some form of down payment, with exceptions for those using VA mortgages with no money down for qualifying servicemembers, veterans, and surviving spouses. There is also no-money-down USDA loans, but these are need-based and have income caps. By comparison, FHA mortgages, with their low 3.5% down payment requirements, are attractive to many house hunters who want to save more money upfront on the mortgage. Do You Really Have To Put 20% Down? Some borrowers may hear stories of borrowers being required to pay 20% down. This would be true in cases where the home buyer wants to avoid mortgage insurance on a conventional mortgage. And while that is not the only down payment option offered in such cases the mere idea of paying 20% down | more...

January 5, 2024

Don’t Make These Home Loan Mistakes

By Bruce Reichstein

Buying a home for the first time is stressful, but there are things you can do as a first-time buyer that will help. Avoid these big mistakes when planning your mortgage. Don’t Change Jobs Before Your Mortgage Closes This advice does not apply to everyone, but it does for those contemplating changing the nature of their employment from having a boss and a traditional workplace to freelance, contract, or per-project type work. There are different FHA home loan rules for non-traditional employment, freelance jobs, commission income, etc. If you were working in a typical job at the start of the home loan application process and are tempted to switch to contract, freelance, or commission work, your job switch could hinder your mortgage loan process. Why? The income rules for those | more...

August 31, 2023

FHA Home Loan Rules And Fair Housing Laws

By Bruce Reichstein

We report on Fair Housing cases from time to time, a reminder to those looking for housing that there are federal laws that protect against discrimination in housing. But what are the FHA home loan rules in this area? Did you know that the FHA loan program has specific instructions to the lender regarding Fair Housing laws? Those instructions are found in HUD 4000.1, the FHA Single-Family Home Loan Handbook. Page 120 of that handbook instructs the lender, “The Mortgagee is required to comply with all federal, state and local laws, rules, and requirements applicable to the mortgage transaction, including all applicable disclosure requirements and the requirements of the Consumer Financial Protection Bureau (CFPB), including those related to: The Fair Housing Act protects both renters and home loan applicants looking | more...

June 20, 2023

FHA Loan Qualifications

By Joe Wallace

We get many reader questions about FHA home loans. A common variation on one such question goes like this: “What qualifications are needed to be approved for an FHA home loan?” We get questions like these quite often. Some people mistakenly assume that FHA loans are only for first-time home buyers or those with lower incomes. This is not true; any qualified FHA loan applicant may be approved for an FHA mortgage. This is true regardless of whether the applicant has purchased a home before, has an income above or below a certain threshold, etc. If the borrower can realistically afford the loan and meet the other lender and FHA requirements, loan approval is possible. There is no minimum or maximum income level for FHA loans–instead, the lender will measure | more...

May 11, 2023

How Escrow Works

By Joe Wallace

When you buy a home with an FHA loan your lender may require you to use an escrow account. This is especially relevant for those who seek One-Time Close construction mortgages, FHA 203(k) Rehabilitation loans, and any other home loan that may require an account to pay for contractors, materials, etc. FHA Reverse Mortgages also require escrow for the payment of property taxes–all Reverse Mortgage borrowers are required to stay current on property taxes as a condition of loan approval. But what is escrow and how does it work? An escrow account is basically a bank account used to hold the money you need to make a good faith deposit, property tax money, etc. The cash is deposited and held on account until the time comes to make the payments. | more...

July 29, 2022

FHA Home Loans And Occupancy: What You Can And Cannot Do

By Joe Wallace

If you are buying an existing construction home with an FHA mortgage, or having one built for you using an FHA One-Time Close construction loan, you will notice some common requirements for these mortgages; one such requirement involves the borrower’s use of the property once the loan has closed. FHA new purchase mortgages, also known as forward mortgages, are intended for those who wish to occupy the home as their main address, or “primary residence”. Some borrowers may be confused by this requirement because they assume you can buy and rent out a home using an FHA mortgage without intending to occupy it. But the reality is that FHA mortgages actually require occupancy by at least one person obligated on the home loan, so how is it possible to purchase | more...

June 3, 2022

What Is An FHA Loan Rate?

By Joe Wallace

What Is An FHA Loan Rate? The interest rate that is charged on your 15 or 30-year FHA mortgage. There are some facts you should know about FHA loan rates, discount points, and how the rates may vary. FHA Loan Rates Are Set By The Lender Technically speaking, the mortgage loan interest rate on your loan is something you negotiate with your loan officer. Your access to the most competitive FHA loan rates will be determined by your FICO scores and other financial qualifications. The better your FICO scores are, the more competitive the interest rate offered might be. If you are worried about your FICO scores ahead of your home loan application, begin credit monitoring and work to maintain or establish a record of on-time payments for all your | more...

April 22, 2022

Employment And Income Verification For FHA Loans

By Joe Wallace

Here is a common variation on an FHA loan question we get frequently. “I have been employed for about two years, do I qualify for an FHA mortgage?” FHA loans require a variety of financial qualifications including FICO scores, your history of payments on financial obligations, your debt-to-income ratio, and other factors. Lender standards and FHA loan rules both apply, as do some state laws and other regulations. There’s no individual factor that determines a borrower’s ability to qualify for an FHA mortgage, a number of variables come into play as mentioned above. Sometimes one or more factors can disqualify a borrower, it’s true-a low FICO score, debt ratios that are too high, missed payments in the last 12 months leading up to the loan application, or major changes in | more...

December 23, 2021

FHA Loan Applications In 2022

By Joe Wallace

Are you one of the many house hunters planning on filling out FHA loan applications for 2022? Are you ready to apply? Here are some tips to help you determine how close you might be to the application stage of a new FHA mortgage. Credit Reports Do you know the contents of your credit reports? Do you know your FICO scores? If not, you’ll need some additional time before applying for your home loan to review your credit, see what the lender may see, and determine whether your credit history is free of errors or evidence of identity theft. If your credit report shows erroneous information or if you suspect identity theft based on questionable entries on your report, you will need additional time prior to your FHA loan application | more...