Articles Tagged With: FHA Requirements

June 26, 2012

FHA Loan Rules For 203(K) Rehab Mortgages

The FHA describes its 203(K) Rehab loan as, “the Department’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.” “Since these are the primary goals of HUD, the Department believes that Section 203(k) is an important program and we intend to continue to strongly support the program and the lenders that participate in it.” But what are the rules for an FHA 203(k)? There are some restrictions on the type of property that can be rehabbed under this program, as well as requirements for the condition of eligible properties. For example, “To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one | more...

June 25, 2012

FHA Home Loans and “Qualifying Ratios”

By Joe Wallace

One frequently asked question about FHA home loans goes something like this: “Why do different banks seem to have different standards for FHA home loans?” It’s a legitimate question–some lenders require different credit scores than others, some are stricter about certain types of credit issues or require longer wait times after bankruptcy or foreclosure. Why? The FHA loan rulebook for lenders, HUD 4155.1, has a section in Chapter Four called “Qualifying Ratios” which can help borrowers understand why some of these variances may occur. Every bank has its own set of standards, based on the need to effectively manage risks in lending while allowing credit access to the largest number of qualified borrowers the company can support. What do the FHA rules require a lender to take into consideration when | more...

June 22, 2012

FHA Loan Limits and Term Rules For Streamline Refinancing Loans

By Joe Wallace

FHA Streamline Refinancing Loans offer qualified borrowers a distinct advantage–there is reduced paperwork for FHA Streamline Loans, the borrower may in some cases be able to get the refinancing loan without an appraisal, and the result can be lower mortgage payments. FHA loan rules say of streamline loans, “Streamline refinances

June 18, 2012

FHA Rescinds Pending Changes To Loan Rules on Collections and Judgments

By Joe Wallace

In March of 2012, we reported the FHA’s pending changes to the rules regarding collections and judgment actions–changes which have been cancelled, at least for now, by the FHA and HUD. According to FHA Mortgagee Letter 12-03, there were important changes to the rules for borrowers with court judgments and/or collection actions on their record scheduled to take effect in July of 2012. Those changes included the following: “If the total outstanding balance of all collection accounts is equal to or greater than $1,000 the borrower must resolve the accounts (e.g. entered into payment arrangements with minimum three months verified payments- paid as agreed) or paid in full at the time of, or prior to closing.

June 15, 2012

Important New HUD Rules For LGBT Home Buyers Seeking FHA Home Loans

By Joe Wallace

There are federal laws in place to prevent housing discrimination on the basis of race, color, creed, national origin, religion, and any number of other factors which have nothing to do with a borrower’s financial qualifications for credit. The Fair Housing Act is one such law, but many other rules apply. No matter if a borrower is applying for a conventional home loan, a VA guaranteed mortgage or an FHA mortgage loan, lenders, brokers, agents, landlords and other parties cannot discriminate in any aspect of the housing process. That said, one important set of protections has been, until recently, missing from the rulebooks for those in need of FHA/HUD services and programs. But in recent times, the Department of Housing and Urban Development has finalized a new set of rules | more...

June 13, 2012

Reader Question: FHA Loan Credit Requirements

By Joe Wallace

A reader asks: “The FHA approves people with poor credit. I see on the website that FHA is getting home loans, can you tell me what are your credit guide lines?” FHA loan rules establish minimum credit requirements for loan approval, but borrowers should know that it’s a mistake to assume an FHA guaranteed mortgage is a “bad credit home loan” or similar products. Banks that participate in the FHA loan program have their own credit requirements–they are not forced to issue home loans to borrowers that don’t meet the financial institution’s minimum credit score requirements for home loans even if the borrower technically meets the FHA minimum credit score cutoff. That’s one reason why borrowers are encouraged to contact the FHA directly (1-800-CALL FHA) to learn about and arrange | more...

June 13, 2012

FHA Loan Reader Questions: Can I Buy Another Home With An FHA Mortgage Loan?

By Joe Wallace

A reader asks, “We purchased our first home using an FHA loan – 5% down. We have outgrown our home due to an expanded family and we are looking to purchase another home that is bigger – is it possible to qualify for another FHA loan – we have at most 10% to put down towards a new home. Our plan would be to rent out this current home we have as it is in a good rental area. Any advice on how we can achieve this?” FHA loan rules, according to the official site at FHA.gov, include a restriction on issuing single-family mortgage loans to investors. Due to this restriction, the official site says, “FHA generally will not insure more than one mortgage for any borrower (transactions in which | more...

June 12, 2012

Bank Of America Settles Maternity Discrimination Claim

By Joe Wallace

A recent press release found at the official site for FHA/HUD announces, “Bank fund will compensate women denied loans because they were pregnant or on maternity leave”. According to the HUD press release 12-095, “The U.S. Department of Housing and Urban Development (HUD) announced today that Bank of America has agreed to pay up to $161,180 to settle allegations that one of the bank’s San Jose, California branches refused to refinance the mortgage of an Irvine woman because she was on maternity leave. HUD reached the agreement with Bank of America to resolve a Fair Housing Act complaint that had been filed by the Fair Housing Council of Orange County (FHCOC).” Those applying for any kind of home loan–including FHA guaranteed mortgages–may not be discriminated against due to pregnancy, family | more...

June 6, 2012

FHA Loans and Government Assistance Payments–Do They Count As Verifiable Income?

By Joe Wallace

One frequently asked questions about FHA home loans involves government benefits and/or government assistance payments. Can these income sources be used for the purpose of getting an FHA guaranteed home loan? Under the right circumstances, the answer is yes. It’s not automatic–the lender must verify the source of the income and also determine how long that income will last. According to HUD 4155.1 Chapter 4 Section E, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.” Borrowers aren’t simply out of luck if that income will not last for three years; it can’t be used as income, but it can be considered in other ways according to the | more...

May 21, 2012

FHA Loan Rules For Credit Qualifying Streamline Refinancing Loans

By Joe Wallace

FHA home loans aren’t just for new purchase mortgage transactions, there are also different types of refinancing loans available. FHA streamline refinancing, so named because of the reduced amount of paperwork and procedures associated with underwriting the refinancing, is one such option. FHA streamline loans come in two basic types–no-credit-check refinancing and credit qualifying refinancing loans. Borrowers may or may not be eligible for the no-credit-check version of the FHA streamline loan, depending on the circumstances. For borrowers who are applying for a credit qualifying FHA streamline loan, the FHA has a set of rules to be aware of–when applying for credit qualifying streamline refinances, the lender is required to do the following: –View and verify the borrower