Articles Tagged With: Joint Loan

April 19, 2017

Multiple FHA Loans? The Rules

Based on some of our reader questions lately, there seems to be some confusion over the rules for FHA loans where the borrower is interested in applying for an additional FHA mortgage. What are the rules in HUD 4000.1 on this issue? There are two general areas of confusion related to those rules. Some borrowers have purchased a primary residence with non FHA loans and want to know if the FHA loan rules governing additional mortgages apply to them. According to a literal interpretation of the requirements in HUD 4000.1, borrowers who have a non-FHA mortgage are free to apply for an FHA mortgage without worrying about being in violation of the rules. FHA loans have rules for additional mortgages apply which specifically to those who already have an existing | more...

February 16, 2017

Credit Score Rules For FHA Mortgages

By Joe Wallace

There’s a common reader question about credit score rules for FHA mortgage loans that we get from time to time that goes something like this: “Is it possible to have a low credit score (500-600) and still get an FHA mortgage?” FHA loan rules state that borrowers with credit scores at 580 or higher are eligible for maximum financing for FHA home loans, which requires a 3.5% down payment from the borrower. For those with credit scores between 579 and 500, 10% down is required. However, these FICO score numbers are FHA loan minimum standards and lender requirements can be and often are higher. Credit score rules for FHA loans include the following instructions (see below) to the lender found in HUD 4000.1, the FHA single-family mortgage loan rule book. | more...

April 27, 2016

FHA Loan Rules For Credit Qualifying: Credit Reports For Each Applicant

By Joe Wallace

One of the most common questions about FHA home loans involves who gets their credit reports reviewed in the application process. FHA home loans permit co-signers, co-borrowers, and non-occupying co-borrowers, and with so many options open to the applicant(s), it can be confusing when trying to figure out who will need to furnish what information in order to apply. FHA loan rules in HUD 4000.1 instruct the lender on who is to have credit reporting data pulled. On page 171 we learn: “The Mortgagee must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The Mortgagee may obtain a joint report for individuals with joint accounts.” But that’s not the only instruction to the lender. We also learn, “The Mortgagee must obtain a credit | more...

March 30, 2016

FHA Loan Rules For Income and Debt Calculation: Collections

By Joe Wallace

FHA loan rules cover a lot of ground when it comes to a borrower’s creditworthiness. There are minimum FICO score requirements, instructions to the lender for reviewing the borrower’s record on-time payments (12 months of reliable payments on all financial obligations is strongly recommended), and much more. One area that is also covered in HUD 4000.1 is what the lender should do if collections are included in borrower’s credit history. The presence of a collection action on a loan applicant’s record may be cause for concern, but there are instructions to the lender on how to view collection accounts and what to do if those collections fall within the lender’s “tolerance” for loan approval. What will the lender require under FHA loan rules if the loan can move forward? HUD | more...

March 11, 2016

FHA Loans And Your Credit Report: HUD 4000.1 Guidelines

By Joe Wallace

We get many questions about FHA loan credit standards. Some examples: “I have a charge-off on my credit report. Am I still eligible for an FHA mortgage?” “My credit reports show some missed payments on student loans. Will this affect my ability to get an FHA mortgage?” These are definitely questions worth asking long before you start the house hunting process. Some borrowers are concerned with FICO score issues, others may have disputed accounts, or collection actions on their credit record. These things can worry a future home loan applicant, and with good reason–some credit issues are a barrier to loan approval, while others may not be quite so serious. Knowing what a lender is required to collect with regard to your credit data is a good way to ease | more...

December 1, 2015

FHA Loans And HUD 4000.1: What The Lender Must See In Your Credit Report

By Joe Wallace

Ever since the new FHA home loan rules for single-family mortgage loans were published in HUD 4000.1, we have been reviewing the new rules and publishing some of the most pertinent changes in policy, restatements of existing policies, and new FHA home loan rules. The FHA and HUD did rewrite, revise, and change portions of the rulebook to update, improve, or clarify those sections. One area that’s important to know about HUD 4000.1 is its instructions to the lender about credit reports. Do you know what the lender must look for, according to HUD 4000.1, in your credit report? To begin with, HUD 4000.1 instructs the lender, “Credit reports must contain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in | more...

When Is An FHA Loan Better Than A Conventional Loan?

November 18, 2015

HUD 4000.1 Minimum Property Standards: Encroachment, Power Lines, Property Access

By Joe Wallace

The FHA loan rules in HUD 4000.1 include plenty of updates, changes, revisions, and restatements of FHA loan policy. The FHA didn’t provide a comparison from the old rules (HUD 4155.1 and HUD 4155.2) and the new, stating it was up to the end user to be aware of the new policies found in HUD 4000.1. That’s why we’re taking a look at some of the crucial areas of the FHA loan rules–to get a closer look at today’s rules and how they might affect your FHA loan transaction. FHA Minimum Property Requirements (MPRs) are a big part of the appraisal process as these requirements inform the appraiser’s work. We begin our examination of FHA MPRs with a look at a few of the basics. Encroachment HUD 4000.1 says, “The | more...

September 30, 2015

FHA Single Family Home Loan Policies: Credit Qualifying Under HUD 4000.1

By Joe Wallace

With the publication of HUD 4000.1 in its entirety, FHA single family home loans have a new policy handbook. It contains existing policy, revised or amended loan rules, and other changes that are relevant when it comes to applying for a single family home loan or refinance loan. With the new rule book, we’re examining the contents of those rules in a variety of areas to show the current state of FHA loan rules, credit requirements, appraisal rules and other important topics. Let’s examine some basics of qualifying for an FHA mortgage under the new rulebook. In general, HUD 4000.1 instructs the lender, referred to here as “the mortgagee”, as follows: “The Mortgagee must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The | more...

August 31, 2015

FHA Loan Rules: Divorce and Separations

By Joe Wallace

We frequently handle reader questions in the comments section regarding FHA loan policies that affect borrowers going through a legal separation or divorce. In some cases, the questions have a lot to do with why a lender may require the spouse’s credit information or other details even though the couple is legally separated. One recent question addressed just that-the FHA loan applicant was being asked by the lender about spouse credit issues even though there was a legal judgment or ruling stating the couple was legally separated and not involved in joint credit or shared debt according to the terms of the legal agreement. Why would the lender, the reader wondered, still require the spouse’s financial or credit information? Unfortunately, there is no one specific answer to give. Some states | more...

August 21, 2015

FHA Single Family Home Loan Rules On Owner-Occupier Status and Investment Properties

By Joe Wallace

FHA loan rules on the nature of “owner-occupied” residences state that a single-family mortgage loan guaranteed by the FHA is only for borrowers who want to live in the home they buy. The “owner occupier” nature of FHA home loans is secured by rules in HUD 4155.1 designed to prevent investors from using this type of FHA mortgage. You’ll find the guidelines for owner-occupied residences in Chapter Four, Section B, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrowers principal residence within 60 days of signing the security instrument, with continued occupancy for at | more...