Articles Tagged With: FHA Requirements

April 12, 2012

FHA Loan Credit Score Requirements

The FHA recently published “The Facts on FHA” on the official blog of the Department of Housing and Urban Development. One of the highlights of that post included a list of actions FHA and HUD have taken since 2009–more steps “to eliminate unnecessary credit risk and assure strong premium revenue flows than any Administration in FHA history” according to acting Federal Housing Administration Commissioner and Assistant Secretary for Housing, Carol Galante. One of the changes made by the FHA in recent times is an update to the required combination of FICO score requirements and down payments. According to Galante, “New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score | more...

April 11, 2012

FHA Loan Questions: Mortgage Insurance Payments

By Joe Wallace

A reader asks, “I am refinancing my home with FHA. I am financing $54,540.00 and the appraisal (by FHA) is $180,000.00. Since I have almost $125,000.00 in equity why are they making me purchase FHA mortgage insurance at $50.00 a month? How long will I have to pay this on a 30 year loan at 4.25%?” Mortgage insurance, also known as MIP, is required by the FHA because it protects the government and the lender against a loss should the borrower default on his or her FHA loan. FHA requirements include mortgage insurance for borrowers making a down payment of less than 20 percent. Mortgage insurance is also required on refinance loans and is included in various rules governing FHA refinancing loans such as the following: “The lender must determine | more...

April 10, 2012

FHA Loan Reader Question: Seller Contributions

By Joe Wallace

A reader asks, “My question: if the purchase price of a home I want to buy is 290,000 the maximum sellers concession can only be a maximum of 6% of the agreed price? Can it be more than 6% if the home values at a greater than 290k ?”

April 3, 2012

FHA Mortgage Insurance Premiums

By Joe Wallace

Yesterday, we answered a reader question about FHA loan Mortgage Insurance Premiums. We were asked, “I thought that it was announced recently that FHA insurance premiums were being decreased, not increased?

April 2, 2012

FHA Loan Questions: Mortgage Insurance Premiums

By Joe Wallace

A reader asks, “I thought that it was announced recently that FHA insurance premiums were being decreased not increased?” Effective June 11, 2012, FHA Up Front Mortgage Insurance Premiums (UFMIP) will decrease for certain types of FHA Streamline Refinance Loans. According to the FHA Mortgagee Letter 12-4, “For all SF Forward Streamline Refinance transactions that are

March 30, 2012

FHA Loans and Credit Reports

By Joe Wallace

One frequently asked question about FHA home loans involves the credit check. Many borrowers want to know what credit score the lender is looking for, (many lenders require a minimum score of 620) but many more also want to know what kind of credit reporting data the loan officer needs to approve or deny an FHA home loan application. There are many areas the lender must review as part of the FHA loan application. A typical credit check includes a review of all credit inquiries over the last three months–one reason why many lending experts recommend not applying for new credit cards or other lines of credit before or during a home loan application. The lender must also review credit information from the last seven years of the applicant’s credit | more...

March 22, 2012

HUD Announces Housing Counseling Grants To Help Families Avoid Foreclosure

By Joe Wallace

The Department of Housing and Urban Development (HUD) has announced $42 million in housing counseling grants to 468 national, regional and local organizations. These grants are intended to help families find housing and avoid foreclosure. According to the press release HUDno.12-055, “Housing counseling grants will assist families in becoming homeowners, many for the first time, and remaining homeowners after their purchase. They also provide assistance to renters and the homeless, and offer financial literacy training to individuals and families.” These grants are awarded to local and regional housing counseling agencies, which in turn offer counseling services to those looking to find or keep their homes. “The HUD-approved counseling agencies this funding supports are crucial in helping struggling families on a one-to-one basis to manage their money, navigate the homebuying process, | more...

March 15, 2012

FHA Loan Reader Question: Collection Actions and Payment Agreements

By Joe Wallace

A reader asks; “I have a student loan that was passed over to a collection agency. I came to a payment agreement with my case manager to pay $50 monthly payments. The original payment amount before collections was $200 a month. I have made consistent payments for 2 years now.” “I am set to close on a house in a few weeks. My mortgage lender is requiring a letter from my collection agency verifying our payment arrangement before I can close. I have called and talked to my case manager at the agency three different times and he is refusing to send any kind of validation letter to acknowledge the payment agreement. The payments have been set up on automatic draft out of my checking account which the agency set | more...

February 24, 2012

FHA Loan Assumptions: An Alternative To Short Sales?

By Joe Wallace

We get many questions about FHA home loans from our readers. Some of those questions concern short sales for FHA home loans, and FHA loan assumption. An FHA loan short sale is a transaction where the home owner, who coordinates with the lender, agrees to sell the home for less than the amount currently owed on the home. An FHA loan assumption is where a home owner agrees to transfer the property to a buyer under the terms of the original loan. According to FHA.gov, “All FHA-insured mortgages are assumable.

February 20, 2012

FHA Loan Reader Question: Self-Employed Borrowers

By Joe Wallace

A reader asks, “Is it possible to get an FHA loan if the ‘gap’ in employment was due to starting your own business? I have 1099?s that show income, as well as pay stubs as a contractor with a contract in place. The company paying me wants to hire me full time as a w-2 employee.” FHA home loans require the borrower to verify employment, but the lender does not have to deny a loan simply based on alternative, non-traditional, or self-employment. However, the rules for these types of employment are a bit more stringent so that the loan officer may properly verify income. When you fill out an FHA loan application, you’re required to list your employment prior to the period of self-employment, plus list out specific details of | more...