Articles Tagged With: FHA Requirements

August 7, 2013

FHA Mortgage Insurance Rules

FHA mortgage insurance rules changed earlier this year–there were a variety of alterations that included a “lifetime of the loan” mortgage insurance premium requirement. Starting in June of 2013, all FHA with case numbers assigned on or after June 3 will be charged annual mortgage insurance premiums “for the maximum duration permitted under statute.” In FHA Mortgagee Letter 2013-04, the new rules state, “For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first.” Additionally, “For any mortgage involving an original principal obligation (excluding financed UFMIP) with | more...

August 2, 2013

FHA Loan Reader Questions: Does My FICO Score Qualify Me For An FHA Mortgage?

By Joe Wallace

A reader asks, “My credit score is 595 would I qualify to get an FHA loan?” This question comes up quite often. Technically speaking, FHA standards for borrowers with FICO scores between 500 and 579 allow the lender to approve a loan for 90% of the maximum financing limit on that transaction–that means FHA standards would require a 10% down payment. Borrowers with FICO scores below 500 are NOT eligible for FHA loans according to the FHA official site. But one thing that’s very important to remember about FHA loan standards for FICO scores is that A) your credit scores are NOT the only criteria used for loan approval and B) the lender is free to require higher FICO standards. Borrowers may be hard pressed to find a lender willing | more...

July 30, 2013

FHA Loan Answers: Buying Homes From Family Members With An FHA Mortgage

By Joe Wallace

Here’s a question about FHA loans that isn’t as common as some, but still comes up often enough to discuss here: can a family member purchase a residence from another family member using an FHA mortgage? FHA home loans have rules designed to protect the integrity of the loan process–FHA loan rules in HUD 4155.1 say that some FHA loan transactions may have different or lower loan amounts depending on the circumstances of those loans. “Certain types of loan transactions affect the amount of financing available to a borrower and how the maximum mortgage amount is calculated. These transactions include identity-of-interest properties with non-occupying coborrowers three- and four-unit properties properties where a house will be constructed by a borrower on his/her land, and/or as a licensed general contractor payoffs of | more...

July 25, 2013

FHA Loans and Your Credit

By Joe Wallace

For some borrowers, the credit approval process is a mystery, especially when it comes to FHA home loans. Do you understand what the lender needs in order to approve a home loan application? Borrowers should understand that FHA loan approval is based on several factors including FICO scores, debt to income ratio, but also the repayment history shown on your credit report. FHA rules and instructions to the lender on this area are found in HUD 4155.1 Chapter Four. In Section C, we get some insight into this process and how the lender is supposed to evaluate your repayment history as found in a credit report: “Evaluating credit involves reviewing payment histories in the following order: • first: previous housing expenses, including utilities, • second: installment debts, • third: revolving | more...

July 25, 2013

FHA Loans After Chapter 7 Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “I filed chapter 7 in March 2010 and discharged in June 2010. I had a home included in the bankruptcy but after the two year waiting period the lender told me I had to wait an additional three years from the time of the final sale of the property which was not until March 2013. So are they correct in stating that it is a five year waiting period before I can qualify for an FHA loan?” FHA loan rules for FHA mortgages applied for in the wake of a Chapter 7 Bankruptcy are found in HUD 4155.1 Chapter Four, Section C, which states the following: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have | more...

July 23, 2013

FHA Loan Minimum Property Requirements: Where Are They Found?

By Joe Wallace

A reader asks, “We are looking into an FHA loan but our I know our house is not totally in code with the FHA/HUD guidelines. Such as railings needed if steps are 2 feet or higher. Is there somewhere that I can find these guidelines so that we can start?” FHA minimum property requirements are found in HUD 4910.01, Minimum Standards For Housing. But there is a very important factor to be considered–FHA loan rules are not the only standards a home must live up to. Anyone who wants to spend time and money fixing up a home to make sure it is in compliance with FHA loan minimum standards must also make sure the home is within state, local or otherwise applicable building codes. FHA appraisals on homes that | more...

July 22, 2013

FHA Loan Reader Questions: A Few Basics:

By Joe Wallace

A reader asks, “Why is there no website that shows you what income qualification rules might apply for an FHA loan ? Is there a maximum income allowed for a first-time, unmarried, home buyer?” There’s a simple reason where there is no website that details income qualification rules for FHA home loans when it comes to maximum loan amounts, first-time home buyer preferences and whether marital status itself affects an FHA home loan application: these are generally not factors. That’s NOT to say that your marital status or income might not affect your FHA loan. Far from it. Married borrowers applying for a loan together may have a better chance based on income factors and other aspects than a single borrower. (Two applicants applying together may also have its share | more...

July 19, 2013

FHA Loan Reader Questions: Social Security Income

By Joe Wallace

A reader asks, “My husband and I have never owned a home. He is a Veteran. He is receiving Social Security. I will also be receiving Social Security. Would we be able to receive a FHA Loan?” FHA loan rules do address Social Security income as a potential source of verifiable income that can be used to qualify for an FHA mortgage loan. For example, in HUD 4155.1 in a section titled “Income Analysis: Individual Tax Returns (IRS Form 1040)” we find the following in the section for IRA Distributions, Pensions, Annuities, and Social Security Benefits: “The non-taxable portion of these items may be added back to the adjusted gross income, if the income is expected to continue for the first three years of the mortgage.” Also, in a section | more...

July 17, 2013

FHA Streamline Refinance Loans: Adding or Deleting Borrowers To The Title

By Joe Wallace

When borrowers with existing FHA mortgages want to apply for streamline refinancing, one question that sometimes comes up is whether or not a borrower is permitted to add or delete someone from the title of the loan at the time of refinancing. FHA loan rules do address this issue. Those rules are found in HUD 4155.1, Chapter Six, Section C under a section titled Borrower Additions or Deletions to the Title on a Streamline Refinance. The concern for some borrowers is whether or not adding or deleting someone might trigger the due-on-sale clause making the entire loan amount payable according to the terms of the clause. The FHA does permit additions and deletions to the title as described in Chapter Six: “Individuals may be added to the title on a | more...

July 17, 2013

Credit Qualifying FHA Streamline Refinances

By Joe Wallace

FHA Streamline Refinances are designed to lower a borrower’s monthly payments and/or get a lower interest rate. For many borrowers this is a no-appraisal/no new credit application type of loan. But in some cases, a borrower’s payments may actually increase with a streamline refinance loan depending on whether permitted add-ons are included in the loan amount. In cases where the payments increase to 20% or more, there is a credit-qualifying requirement for the new loan. This requirement is found in the FHA loan rules for Streamline Refinancing loans, which say: “A credit qualifying streamline refinance must be considered when a change in the mortgage term will result in an increase in the mortgage payment of more than 20% when deletion of a borrower or borrowers will trigger the due-on-sale clause | more...