Articles Tagged With: FHA Mortgage

April 16, 2018

FHA Home Loans For New Construction, Existing Construction Homes

FHA home loans are available for a variety of different types of property. You can use an FHA mortgage to buy a typical home in the suburbs, a condo, a town home, mobile or manufactured homes, etc. FHA home loans are also for properties classified in one of several ways; existing construction, new construction, proposed or under construction, etc. What do these terms mean and how does the property type affect the FHA home loan? In some cases the nature of the property may dictate whether a builders’ warranty must be provided. New construction homes, for example, must include a 10-year warranty. This is true for all property types that fall under the FHA definition of new construction property including proposed construction homes, under construction homes, and those that have | more...

Home Buying, FHA Loans, And Mortgage Trends

March 15, 2018

What You Can Buy With An FHA Mortgage

By Joe Wallace

Do you know what you can buy with an FHA mortgage? The answer may surprise you if there’s an assumption that only typical suburban houses are available for purchase with an FHA loan. Know your options long before you start the planning stages of your new loan-you will be glad you did. What You Can Buy With An FHA Home Loan In essence, the FHA loan program is strictly designed for home buying, for properties with as many as four living units. You cannot use an FHA loan as a personal loan, to purchase a home without (or that will not be affixed to) a permanent foundation. You can use an FHA loan to buy a home, but not a vacation home or other property that will not serve as | more...

March 15, 2018

HUD Announces Additional Hurricane Recovery Efforts In Houston

By Bruce Reichstein

The Department of Housing and Urban Development has announced a Fair Housing agreement with the City Of Houston designed to enhance hurricane recovery efforts there. According to a press release at the FHA/HUD official site, HUD and the city reached, “a joint agreement designed to expand housing choice and mobility for lower income residents, including those experiencing homelessness and victims of Hurricane Harvey.” The agreement includes a new requirement for the City of Houston to adopt “multifamily priorities and a policy for objectively evaluating federally supported affordable housing developments in all areas of Houston; to seek to invest additional funds in homeless assistance programs, and; to encourage more landlord participation in Houston’s housing voucher program”. “Today, we announce a positive agreement that works to expand housing options for lower income | more...

March 8, 2018

What Goes Into Your FHA Mortgage Payment?

By Bruce Reichstein

What goes into your FHA mortgage payment? It’s easy to assume that you’re paying principal and interest, divided by the number of months you are obligated to on the mortgage note. But is that really all that goes into your monthly mortgage bill? The short answer is no, there’s more to it than that. FHA Loan Rules For Debt-To-Income Ratios HUD 4000.1, the FHA single family home loan handbook, has instructions for the lender to help determine a borrower’s credit-worthiness. The lender doesn’t just calculate the amount of your income versus how much debt you have going out on a monthly basis-that debt ratio has to be calculated with and without the mortgage payment to see what percentage of your monthly income is taken up by debt. The formula is | more...

March 1, 2018

FHA Home Loan Fact And Fiction

By Joe Wallace

FHA home loan fact and fiction; do you know what’s true and what’s not about your FHA home loan options? There are plenty of misconceptions about getting an FHA home loan including the all-time number one-the idea that FHA loans are ONLY for first-time home buyers. That is definitely NOT true. FHA loans are for any financially qualified borrower regardless of their previous home ownership status. FHA home loan fictions also include the idea that you can only purchase a typical suburban home with an FHA mortgage; this is also not true as FHA loans can be approved for mobile homes, condo units, mixed-use property that is primarily residential, town homes, and multi-unit homes. The truth about FHA home loans is that borrowers are allowed to buy “real property” with | more...

February 16, 2018

FHA 203(k) Rehab Mortgages: Who Does The Rehab Work?

By Joe Wallace

When it comes to FHA 203(k) rehab loans, many borrowers want to know who does the work? Can the borrower hire a contractor, is the borrower required to do the work themselves? What are the rules? The guidelines for the FHA 203(k) rehab loan program are found in HUD 4000.1, which states that certain standards are in place when trying to select the contractors to do the labor. For starters, this type of loan requires that the borrower use the services of a 203(k) loan consultant. “The Mortgagee must select an FHA-approved 203(k) Consultant from the FHA 203(k) Consultant Roster in FHAC. The Mortgagee must not use the services of a Consultant who has demonstrated previous poor performance based on reviews performed by the Mortgagee. The Consultant must inspect the | more...

February 6, 2018

Why Are FHA Loan Rules Different For Family-Owned Business Employees?

By Joe Wallace

Why are FHA loan rules different for family-owned business employees? Some borrowers fit this category-that where you work for the family business but have no ownership in it-and the rules are important to understand. The FHA definition of income derived from a family owned business is specifically, “Family-Owned Business Income refers to Employment Income earned from a business owned by the Borrower’s family, but in which the Borrower is not an owner.” The major difference in the FHA loan rules for small business owners versus those they employ (but who do not own a stake in the business) basically recognizes the difference between being an employee and an owner. The rules for self-employed FHA home loan applicants differ from employees. Self-employed borrowers are required to show that their employment is | more...

February 5, 2018

FHA Loan Employment Rules

By Joe Wallace

FHA loan employment rules include a requirement that the FHA lender insure the borrower’s income is stable, reliable, and likely to continue. There are certain standards the FHA uses to determine this beginning with a minimum employment length. The rules governing this are found in HUD 4000.1, beginning on page 197 where we learn, “The Mortgagee must document the Borrower’s income and employment history, verify the accuracy of the amounts of income being reported, and determine if the income can be considered as Effective Income”. HUD 4000.1 says effective income must be legally derived and reported on the borrower’s income tax forms. But what about the borrower’s work history? HUD 4000.1 tells the lender this is important, too-not just the amount you earn or the responsibilities you carry. “For all | more...

Is U.S. Citizenship Required For An FHA One-Time Close Construction Loan?

January 29, 2018

FHA One-Time Close Construction Loans: Down Payments and Interest Rates

By Bruce Reichstein

FHA One-Time Close / Single-Close construction loans have different requirements for down payments and interest rate issues can be more complex; many borrowers are interested in this home loan but aren’t clear on the finer points. Today we examine how down payment issues and interest rate rules apply to the FHA One-Time Close construction loan. The FHA loan handbook, HUD 4000.1 describes the One-Time Close loan, also known as an FHA construction-to-permanent mortgage, as a loan that “…combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional long- term permanent residential Mortgage with a single mortgage closing prior to the start of construction”. FHA One-Time Close Construction Loan Down Payment Rules HUD 4000.1 allows for some unique down payment sources | more...

January 23, 2018

FHA Loan Rules For Debt-To-Income Ratios: Business Debt

By Bruce Reichstein

FHA loan rules for debt-to-income ratios (DTI) include guidelines for the lender when the loan applicant has debts listed in his or her name, but those debts are actually those of the borrower’s business. What do you need to know about this type of debt? Before addressing that issue, it’s important to point out that debt ratios are a very important part of the FHA loan approval process. The higher the amount of your monthly debt compared to your monthly income, the harder your loan officer has to work to justify approving the loan. A borrower with too much monthly debt may be required to have compensating factors as a condition of loan approval. Those factors can be a larger down payment, substantial savings in cash, or other things as | more...