Articles Tagged With: FHA Requirements

March 12, 2013

FHA Loan Answers: Credit Evaluations

A reader asks, “If my husband has a judgement against him from an old credit card debt, can we put the house in my name and use my credit only and still get approved? Or will they check him at some point anyway and reject me because of his judgement?” The answer to this reader question can be complicated. A married FHA loan applicant who is not affected by community property laws in his or her state may be able apply for an FHA loan without the participation or financial obligation of the spouse. As long as state laws don’t state otherwise, a married FHA loan applicant should be able to apply for an FHA guaranteed mortgage without obligating anyone else on the loan. In cases where more than one | more...

March 8, 2013

FHA Loan Answers About Down Payments

By Joe Wallace

We get reader questions about FHA loan down payments–many people aren’t sure how much they need to pay up front and how much is required by the FHA loan program. Some borrowers mistakenly assume there’s a “no money down” option for first-time FHA loan applicants, and others assume there is a set dollar amount which must be paid regardless of the transaction. What’s the reality? FHA home loans do not feature a no-money-down option. FHA loan rules state that the minimum required down payment is as follows: “For purchase transactions, the maximum LTV is 96.5% percent (the reciprocal of the 3.5% required investment).” The acronym “LTV” stands for loan-to-value and is, in simple terms, the amount of the loan after the down payment has been made. An LTV of 96.5% | more...

March 1, 2013

FHA Loan Reader Questions: First Time Homebuyer Requirement?

By Joe Wallace

A reader asks, “I’m not a first time home buyer, I have a conventional loan for a home that I’m planning to keep as a rental home. Can I qualify for a purchase FHA loan on a primary home?” One of the common misconceptions about FHA home loans is that you MUST be a first-time home buyer in order to qualify for one. This is not true. You may have state or local homebuyer assistance programs in your area that do require the applicant for that program to be a first time buyer, but FHA loans are open to all qualified applicants. The real issue in this reader question has more to do with debt-to-income ratios (DTIs)–will the FHA lender approve a buyer who already owns a home? Single-family new | more...

February 22, 2013

FHA Loan Limits For High Cost Counties: FHA Loan Questions

By Joe Wallace

Many borrowers want to know why FHA home loans are available for the same size and type of properties, but in larger or smaller amounts depending on the market. Why aren’t FHA loan amounts standardized? The basic answer to this is that all housing markets are different, and the costs in one market are not necessarily the same for another. A two-bedroom home with a garage in Bangor, Maine might not cost the same to build or finance as a similar home in Cleveland, Ohio. The same goes for properties located on either coast—how much would that two-bedroom home build and sell for in Los Angeles or New York? To address these issues, the FHA has created a table that lists the FHA loan limits for counties where the costs | more...

February 20, 2013

FHA Loans and Closing Costs–What You Should Know

By Joe Wallace

FHA loans require a minimum down payment, but those funds are not the only money needed at closing time. Borrowers should know and budget for a variety of expenses that are due on or before closing time. That’s one reason why finance experts recommend taking a year or more to prepare for any type of home loan–saving for these expenses can make things financially easier once the home buying process begins. But what are the costs and expenses a borrower will need to close the deal? Fortunately the FHA loan rulebook spells out the items needed at closing time–these must be paid for on or before the deal closes. The FHA Loan rulebook, HUD 4144.1, says, “In addition to the minimum downpayment requirement described in HUD 4155.1 5.B.1.a, additional borrower | more...

February 19, 2013

The New FHA MIP Rules

By Joe Wallace

We’ve written more than one blog post recently on the changes to the FHA mortgage insurance policy. Because of the potential for confusion over these changes, we’re attempting to explain these changes one important detail at a time. When the FHA announced its changes and made them official, it issued a mortgagee letter which includes the following information: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. 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 | more...

February 15, 2013

Minnesota Condo Association Settles Housing Discrimination Complaint

By Joe Wallace

A recent press release issued on the FHA/HUD official site announces a settlement in a housing discrimination case. According to HUDNo.13-026, “The U.S. Department of Housing and Urban Development (HUD) announced today that a homeowners association and property managers for an Edina, MN, condominium will pay more than $40,000 under a Consent Order resolving allegations that they refused to allow children under the age of 18 to live at the property in violation of the Fair Housing Act.” The release adds, “According to a condominium owner’s complaint filed with HUD, the condominium association told him and his wife that they were violating the association’s document by allowing their minor children to live with them for more than 30 days in a calendar year. In addition, the condominium association levied fines | more...

February 14, 2013

FHA Proposes Down Payment Changes For Larger FHA Loans

By Joe Wallace

The FHA is considering changes to the maximum LTV and down payment rules for certain FHA mortgages (described by the FHA as those “in excess of $625,500”) according to the FHA official site. According to HUDNo.13-010, “FHA will announce a proposed increased down payment requirement for mortgages with original principal balances above $625,500. The minimum down payment for these mortgages will increase from 3.5 to 5 percent.” “This change, coupled with the statutory maximum premiums charged for these loans, will help protect FHA and further facilitate its efforts to encourage higher levels of private market participation in the housing finance market.” In a statement published in the Federal Register Volume 78, Number 25, you’ll find some supplemental information including the following: “…the maximum LTV will be limited to 95 percent | more...

February 11, 2013

FHA Loan PMI Changes: A Reader Question

By Joe Wallace

A reader asks. “I read somewhere that the PMI will no longer drop off after 78% of the LTV is reached and will remain on the loan until full payment. Is this true?” The FHA has indeed changed its rules concerning mortgage insurance premiums. We covered the FHA announcement in a recent post, but many borrowers or soon-to-be FHA loan applicants wonder if the new FHA loan rules for mortgage insurance apply to their loans. Let’s examine what the FHA has announced about mortgage insurance premiums. The changes are twofold–one is an increase in the MIP premiums, the other change has to do with mortgage insurance cancellation policy. In a press release titled, “FHA Takes Additional Steps To Bolster Capital Reserves” the agency announced; “FHA will increase its annual mortgage | more...

February 8, 2013

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “My credit score is 678. When my husband tried to get his FICO score, he was told he couldn’t because he did not meet the minimum scoring requirements. (He is just starting to build credit and has nothing). Will we be able to qualify for an FHA loan based on my credit score?” FHA loan rules have a lot to say on this. In HUD 4155.1, you’ll find the following under the section titled Analyzing The Borrower’s Credit: “Neither the lack of credit history nor the borrower’s decision not to use credit may be used as a basis for rejecting the loan application. We also recognize that some prospective borrowers may not have an established credit history. For those borrowers, and for those who do not use | more...