Articles Tagged With: FHA Requirements

April 19, 2013

FHA Loan Reader Questions: FHA Loans For Retired People

A reader asks, “Have been trying to get my Freddie Mac loan reduced for 16 months with no good results. Can a retired person get an fha/obama loan if they have excellent credit, no debt and low income?” The answer to this question really depends on more information. The FHA itself does not have a minimum income requirement for FHA refinance loan approval. Instead, the FHA guidelines state that the borrower’s debt-to-income ratio would be a factor in some kinds of refinancing. The term “low income” itself is very relative–what might seem to be low income for some is perfectly acceptable in other cases. A borrower with good credit and a low debt-to-income ratio may be perfectly able to qualify for an FHA mortgage assuming other qualifying factors are also | more...

April 17, 2013

FHA Amends Guidance For Hurricane Sandy Disaster Assistance

By Joe Wallace

The FHA has issued a new mortgagee letter amending its guidance and policies for Hurricane Sandy disaster relief as well as general guidelines for disaster assistance related to FHA home loans, loan forbearance and related measures. Mortgagee Letter 13-11 states, “As indicated in Mortgagee Letter 2012-23, HUD requires a moratorium on foreclosures of properties in Presidentially-Declared Major Disaster Areas (PDMDAs) for a ninety (90) day period beginning on the date of each Disaster Area Declaration. The moratorium applies to the initiation of foreclosures AND foreclosures already in process. As necessary, HUD may communicate further specific guidance for extension of moratorium periods for individual disasters.” Additionally, “During foreclosure moratorium periods, HUD expects servicers to make every effort to communicate with and assist affected borrowers in rebuilding or repairing damaged properties, minimizing | more...

April 15, 2013

FHA Loan Answers: FHA Loan Applications, Separation, and Divorce

By Joe Wallace

A reader asks, “I’m married, the current home is FHA loan under my husbands name only….can i buy a home for 120,000 under FHA to live in? If so, will they count my husbands debts against me getting the loan? We have agreed to live separate, stay married though, do they require legal separation?” This question doesn’t have a one-size-fits-all answer for one very important reason. FHA loan rules go hand-in-hand with state community property laws. What does this mean? If a borrower is divorced, separated, or still legally married in a community property state, each spouse may be liable for all debts incurred during the marriage. In such cases, the FHA lender may be required to include both spouses on the FHA mortgage, run credit checks, etc. on both | more...

April 11, 2013

FHA Loan Requirements For Employment Verification

By Joe Wallace

When you apply for an FHA mortgage, you’re asked to fill out a variety of forms and authorizations giving the lender permission to verify your income, credit history and your employment record. But what is a lender looking for when it’s time to verify your employment? FHA loan rules instruct the lender to carry out a minimum employment review in addition to whatever policies are used by the financial institution. The FHA rules don’t override the bank’s standards, but they do establish a baseline for what must be done at a minimum. According to HUD 4155.1 Chapter One Section B, “The lender is required to verify the applicant’s employment history for the previous two years. However, direct verification is not required if all of the following conditions are met: • | more...

April 9, 2013

FHA Loan Reader Questions: Foreclosure Waiting Period

By Joe Wallace

A reader asks, “I’m in the process of obtaining a FHA Loan. I completed my Chapter 13 bankruptcy a year ago after completing five years of payments on time. My credit score is not an issue right now. All of my paperwork is in, or so I thought. My mortgage lender now tells me that I need a letter from the bankruptcy court saying that I’m allowed to get a loan.” “She says that this is a requirement of the underwriters. I think that the underwriter should only be asking for this if I was still in the bankruptcy, not now, when I’ve been cleared by the courts. What can I do?” The answers are not simple in a situation like this, and there are many details we aren’t privy | more...

March 26, 2013

FHA Loan Questions: Down Payments On Homes Sold Between Family Members

By Joe Wallace

Sometimes an FHA loan transaction involves the sale of a home between family members. In such cases there are FHA loan rules that may apply depending on the circumstances. A reader asks, “If I buy a house from a relative is it true that I have to have 15% down payment for FHA loan?” A quick read of HUD 4155.1 Chapter 2 Section B reveals some special rules that apply in circumstances like these. This situation is known as an “identity of interest” transaction. The FHA defines “identity of interest” as, “a sale between parties with family or business relationships”. What do FHA loan rules say about such sales? “The maximum loan-to-value (LTV) factor for identity-of-interest transactions on principal residences is restricted to 85%.” That means that yes, the borrower | more...

March 25, 2013

FHA Loan Reader Questions: 401Ks in the Debt To Income Ratio?

By Joe Wallace

A reader asks, “My sister in law borrows some fund from her 401(k) to refinance her home. She certainly has to back the fund back to her 401(k). The lender says this monthly payment shall be counted when computing her Debt to Income Ratio. According to the FHA, the following list of financial obligations should not be used to calculate the debt to income ratio: Other retirement contributions, such as 401(k) accounts (including repayment of debt secured by these funds). I notice that this blog was written in year 2011. Do these rules still apply at present or have there been any changes so far? It’s true that the FHA has guidelines about how to view a 401K when it comes to calculating the debt-to-income ratio. According to HUD 4155.1: | more...

March 22, 2013

Your FHA Loan Down Payment

By Joe Wallace

One of the most commonly asked questions about FHA loans is “How much will my down payment be?” The answer to that question depends on how much your home loan is and whether you’re paying the minimum 3.5% down payment or a larger amount. Regardless of how much you pay, the FHA has rules about HOW the downpayment is made. Did you know there are “acceptable sources” for down payment funds as well as “unacceptable sources”? For example, a borrower is free to use money saved in a checking, savings, or investment account. But the borrower cannot use cash advance loans or payday loans to make the down payment. In fact, any “non-collateralized” loan is not an acceptable source of down payment funds. The FHA rules in these circumstances extends | more...

March 20, 2013

FHA Loan Answers: Rules For Occupancy

By Joe Wallace

We answer a lot of reader questions about FHA loans. One of them most common involves the FHA occupancy regulations for single family loans. Readers want to know if they can rent out a house purchased with an FHA loan under the single-family mortgage program. Is this possible? Are FHA single-family mortgages available for vacation homes or other limited-occupancy residences? A look at the FHA loan rulebook clears up these questions quickly According to HUD 4155.1, Chapter Four Section B, we learn the following under the section titled Eligibility Requirements For Principal Residences: “This topic contains information on eligibility requirements for principal residences, including • a definition of principal residence • the FHA requirement for establishing owner occupancy • FHA-insured Mortgages on principal residences and investment properties, and • exceptions | more...

March 20, 2013

FHA Loan Questions: Building Codes and Minimum Property Standards

By Joe Wallace

A reader asks, “My mom is trying to sell her house and when it was built it was on septic. When my parents bought the house in 1988, the neighborhood had been subsidized and city sewer was installed but not to their house that was already there prior to subsidizing.” “Now to get it on city sewer is gonna cost 13,000 dollars that she doesn’t have. A potential buyer has put a bid on the house and is applying for an FHA insured loan and they are saying it HAS to be hooked to city sewer. Is this correct or does her existing system which is up to codes and works appropriately acceptable?” The answer to this question may well depend on state or local building codes. In these cases | more...