Articles Tagged With: FHA Requirements

September 11, 2012

FHA Loan Minimum FICO Score: A Reader Question

A reader asks, “What is the lowest starting credit score?” This is a difficult question for some borrowers because the answer isn’t as straightforward as quoting the FHA loan rules. Individual lenders don’t have to require a standard identical to the minimum–they are free to require higher scores. For example, in a 2010 press release titled, “FHA Announces Policy Changes to Address Risk and Strengthen Finances ” the FHA and HUD announced a change for minimum FICO scores required in order to be approved for an FHA guaranteed home loan. The press release stated FHA and HUD planned to: “Update the combination of FICO scores and down payments for new borrowers. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% | more...

August 31, 2012

FHA Loan Reader Question: Am I Eligible For an FHA Loan?

By Joe Wallace

A reader asks, “Me and my husband lost our home due to a house fire. We are currently in a Chapter 13 bankruptcy and have been since January of this year. Is there any way we can buy a new home in this situation? We both have jobs also.” FHA loan rules specifically address the circumstances a borrower who has a Chapter 13 on his or her record can get an FHA home loan. According to HUD 4155.1 Chapter Four Section C; “A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that

August 30, 2012

FHA Loan Reader Questions: How Long To Close The Home Loan?

By Joe Wallace

A reader asks, “Once an offer has been made on a home, how long should it take a lender who has prequalified but not preapproved a loan to close on the home?” There are many variables at work with an FHA home loan, so there is no set time period. Many lenders may use a stock answer of between 30 and 45 days, but you should not expect an FHA loan to close within a week to ten days of the mortgage application. It is very important to point out that pre-qualifying for an FHA loan is not the same as having the lender process the loan application data, verify income and employment, and pull your credit reports. That process definitely takes time, which is why the 30-45 day window | more...

August 22, 2012

What Does My Lender Need To Process My FHA Loan Application?

By Joe Wallace

FHA loan rules specify a list of required documents and paperwork needed to process an FHA home loan properly. In addition to your application data, the lender needs a list of things in order to perform the “mortgage credit analysis”. Not all of these documents are supplied by the applicant, but some of the lender-generated paperwork requires the borrower’s permission in writing, such as the approval to pull credit reports from the three major credit reporting agencies Equifax, TransUnion, and Experian. The list of required documentation also includes “evidence of a Social Security number” which is usually your Social Security card or other documents the lender may accept as proof of your number. The lender must complete a verification of employment, which means following up on the data you provided | more...

July 27, 2012

How Do FHA Loans Differ From Conventional Mortgages?

By Joe Wallace

FHA guaranteed home loans differ from conventional loans in many ways. The required down payment for FHA home loans is often lower (a minimum of 3.5% down is required, where conventional mortgages may ask higher down payments). FHA home loans feature no penalty for early payoff, may have lower interest rates and other costs, and FHA loans can be assumed–a borrower may transfer the loan to another qualified borrower rather than having the borrower apply for a new loan. But FHA home loans are also different because of the primary purpose of an FHA guaranteed single-family home loan–these loans are intended for residences. They are not for investment properties, time shares, etc. FHA loan rules state; “FHA

July 23, 2012

FHA/HUD Assistance For New Jersey Storm Victims

By Joe Wallace

A recent HUD press release, HUDNo.12-117, announced disaster assistance for New Jersey storm victims, including those with FHA guaranteed mortgages. On Thursday, July 19th, President Obama announced a disaster declaration for Atlantic, Cumberland and Salem Counties. According to the press release, “The President

July 19, 2012

A Second Chance For Some FHA Borrowers? HUD Accepting Applications to Purchase Troubled Neighborhoods

By Joe Wallace

The FHA and HUD have issued a press release about the Distressed Asset Stabilization Program, which is described as “an expansion of an FHA disposition program that sells pools of defaulted mortgages headed for foreclosure and provides the opportunity for the purchaser and borrower to avoid a costly foreclosure.” HUDNo.12-116 says “Qualified entities interested in purchasing pools of severely distressed loans formerly insured by the Federal Housing Administration (FHA) can now submit applications for the Distressed Asset Stabilization Program“, stating that around 3,500 loans will be sold in four areas among the communities hardest hit by the foreclosure crisis. Those areas are Chicago, Illinois, Newark, New Jersey, Phoneix, Arizona and Tampa, Florida. This stabilization program is part of the Obama Administration’s efforts to stimulate “public/private partnerships to stabilize neighborhoods and | more...

July 17, 2012

General FHA Refinancing Loan Rules

By Joe Wallace

There are many things borrowers ask when applying for an FHA refinancing loan for the first time. Some borrowers are interested in lowering their monthly payments, others are interested in cash-out refinancing loan options. But there are some basics every borrower should know about FHA refinancing loans, regardless of what kind of refinancing they wind up applying for. For example, FHA loan rules as written in HUD 4155.1 Chapter Three state that a borrower must be current on any loan being financed. “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” “Example:

July 16, 2012

FHA Loans and Military Service

By Joe Wallace

A reader asks, “Can you still use the FHA while being stationed overseas and still active duty?” This is a fairly complex issue and the answer is dependent on circumstances. If an active duty military borrower wishes to purchase a home with an FHA mortgage loan while still stationed overseas, there are several questions to be answered, including how the borrower intends to execute the FHA loan application. Eligible borrowers who are able to fill out the application themselves may be able to clear this initial hurdle, but those who rely on a power of attorney should know the FHA rules on loan applications in these situations: In general the FHA rules state, “The initial mortgage loan application may not be executed by using a power of attorney, except in | more...

June 27, 2012

FHA 203(H) Home Loans For Disaster Victims

By Joe Wallace

There is much in the news about wildfires, tropical storms and hurricanes. Tropical Storm Debbie has brought large volumes of rain and flooding risks to Florida residents, and Colorado home owners are currently threatened by spreading fires. In presidentially-declared disaster areas, the FHA offers a program to help victims recover. The FHA 203(h) home loan for disaster victims is described on the FHA official site as