Articles Tagged With: Principal and Interest

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

April 26, 2017

FHA Loans For Additional Homes: A Reader Question

Are FHA loans for multiple properties possible? That’s what’s on one reader’s mind recently. “So is there a maximum number of properties one can theoretically have under FHA guidelines?” “Say for example a person owns a home in one city with an FHA mortgage and then has to relocate to another city for job reasons. While in this city there family size increases by several individuals via marriage and or kids. Would that person be able to get a 3rd FHA? mortgage.” This reader question about FHA loans is in response to a blog post we did recently about the issue of applying for another FHA mortgage while currently paying on an existing FHA home loan. The gist of that post is that while FHA loan rules do not generally | more...

April 18, 2017

FHA Loans And The 100 Mile Rule: A Reader Question

By Bruce Reichstein

A reader asked us a question about FHA loans and “the 100 mile rule”. “I am currently looking to purchase a home with FHA financing 5 miles from my current home in California. The current home I own is secured with a conventional loan. I would like to rent this home out and buy a larger home and finance it FHA because I dont have very much saved up for a larger down payment. Does the 100 mile rule apply to me?” The reader is asking in response to a post we made earlier this year about military FHA borrowers and occupancy rules for FHA loans. This quote from that original post, referencing FHA loan rules in HUD 4000.1, seems to be the issue of most concern for the reader: | more...

April 10, 2017

FHA Mortgage Occupancy Rules

By Bruce Reichstein

A reader asked us a question this weekend about FHA mortgage loan occupancy rules. “I purchased a home with an FHA loan and intended to live in it for 4 years until my fiancee got orders to relocate with the Air Force. Wellhe got orders to move from Colorado to Florida but I just purchased my house 3 months ago. Can I not leave Colorado and move with my fiancee?” HUD 4000.1, the FHA single-family home loan rule book, addresses situations like these, stating: “Borrowers who are military personnel, who cannot physically reside in a Property because they are on Active Duty, are still considered owner occupants and are eligible for maximum financing if a Family Member of the Borrower will occupy the subject Property as their Principal Residence, or | more...

March 29, 2017

FHA Loans With A Non-Occupying Co-Borrower

By Bruce Reichstein

How does having a non-occupying co-borrower affect your FHA mortgage? What happens if one of the borrowers decides they want a change in their status as occupying or non-occupying? A reader asked us a question along these lines recently in the comments section: “I just purchased my home in November 2016 with my husband’s uncle as a co-borrower (not living in the property). Now he is getting a divorce and his soon-to-be ex-wife wants the househe basically just helped me qualify of put the down payment to purchase and pay the mortgage on my ownhe even signed hes rights to the title the day we signed for the property is I was told. I could put in that paper after about 6 months of having the property but now I | more...

March 7, 2017

Buying A Home From A Family Member

By Bruce Reichstein

Is there a penalty of some kind for purchasing a home from a relative when using an FHA mortgage? A reader asked a question about that recently in our comments section. “I would like to purchase my father-in-laws home. He passed away 2 1/2 years ago. His estate was left to my brother-in-law and my two daughters since I was divorced from his son many years ago and he passed away 17 years ago.” “We have been keeping up and the utilities have been in service since then and we have been keeping the house up cleaning and painting it. The house appraised $109K. My question is: for me to purchase the house through FHA do I have to have been living in the house for a year and the | more...

February 27, 2017

Types of Homes Eligible For FHA Mortgages

By Bruce Reichstein

What kinds of property types can be purchased with an FHA mortgage loan? It’s a simple question, but there are some occasional misconceptions about FHA requirements for single family homes that borrowers should know about as they plan their mortgage. There are rules on eligible property types that can be purchased with an FHA mortgage loan. These rules are found in HUD 4000.1, and include the following guidance to the participating FHA lender: “FHAs programs differ from one another primarily in terms of what types of Properties and financing are eligible. Except as otherwise stated in this SF Handbook, FHAs Single Family programs are limited to one- to four-family Properties that are owner-occupied Principal Residences.” The phrase, “owner-occupied principal residences” is an important one-FHA mortgage loan rules include an occupancy | more...

February 3, 2017

Non-Occupying Co-Borrowers: A Reader Question

By Bruce Reichstein

FHA loan rules state that in cases where there are non-occupying co-borrowers, different down payment requirements may apply. According to FHA loan rules, “A Non-Occupying Borrower Transaction refers to a transaction involving two or more Borrowers in which one or more of the Borrower(s) will not occupy the Property as their Principal Residence.” A reader got in touch recently to ask a question about the FHA loan down payment requirement in situations that feature non-occupying co-borrowers. “I see below under 4155.1 (page 78 of 413) that unrelated individuals that can document evidence of a longstanding, substantial family type relationship would qualify for maximum financing. So since a cousin is classified as unrelated yet they’ve know each other since birth and have been living as family since then would then qualify | more...

January 12, 2017

FHA Loan Rules For Part-Time Income

By Bruce Reichstein

FHA loan rules require the lender to verify both employment and income. The lender must determine that a borrower’s income is both stable, and likely to continue for the purpose of making the mortgage loan payment. But what kinds of employment can a lender use to qualify the borrower? A reader got in touch with us recently to ask, “What if I have a 20 year old borrower that graduated HS in 2014. She has 2 jobs (receptionist at both). One shes had for 2 years 9 months and only works 15 hours a week and the second shes had for 1 year 4 months and puts in 20 hours a week. Will FHA accept both incomes as qualifying income?” FHA loan rules covering this issue are found in HUD | more...

March 29, 2016

FHA Loan Rules For Debt Calculation: Installment Loans, Revolving Charge Accounts

By Bruce Reichstein

It’s easy to forget that FICO scores are not the only credit issue lenders will examine when reviewing your FHA mortgage loan application. A lender isn’t just concerned with your scores; your ability to repay the loan and make your monthly mortgage payment requires a review of a potential borrower’s income and debt. The lender has different standards depending on the type of debt. For example, changes to FHA loan rules published last year require the lender to take student loan debt into account–even if the loan isn’t payable yet. Such debts are known as “deferred obligations” and if no monthly payment is available, the lender must take a percentage of the total debt to make the monthly payment estimation. FHA loan rules in HUD 4000.1 also include standards for | more...

When Is An FHA Loan Better Than A Conventional Loan?

February 3, 2016

FHA Loan Assumption Rules In HUD 4000.1

By Bruce Reichstein

FHA home loans permit the home owner to have the mortgage assumed by another person, who would become the owner of the property and financially responsible for the mortgage. FHA home loans were, long ago, considered “freely assumable” with no real participation required of the lender. Later, the FHA loan rules changed to require lender participation and approval of an FHA loan assumption. Late last year, the FHA and HUD issued HUD 4000.1, which is the definitive rule book and policy manual for the FHA single family home loan program. Many changes, updates, and restatements of FHA/HUD policies were published in HUD 4000.1, and we’ve been examining some of the most important passages in the new rule book to help borrowers, lenders, and real estate agents stay current on FHA | more...