June 25, 2017

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Articles in Category: Energy Efficient Mortgage

How Much Can I Borrow With An FHA Mortgage Loan?

One of the most common questions about FHA loans is, “How much can I borrow?” The answer to that question is a lot easier to get by using an online mortgage calculator to factor in the length or term of the loan, interest rate (estimated), estimated property taxes and other details. Some of the information you need to calculate how much you can borrow depends on circumstances. The interest rate, for example, is determined in part by what rates are on offer currently based on market conditions and other factors but also by your credit history and FICO scores. The better your FICO scores are, the better the interest rates. The borrower and the lender negotiate interest rates on FHA mortgages, they are not set or regulated by the FHA | more...

 

FHA Loan Pre-Approval

What is the difference between FHA loan approval and getting pre-approved for an FHA mortgage? Some borrowers get confused during the initial process because it’s easy to assume that getting through pre-approval means you’ve been fully approved for the mortgage. The reality is that pre-approval is a tool for the borrower and the lender to determine if you’re ready to buy based on your income, debt to income ratio levels, the amount of down payment you have saved, etc. It’s the start of the loan process, but it is not a guarantee that you have an FHA mortgage loan-yet. Getting pre-approved for an FHA mortgage means that you’ve used an online mortgage loan calculator or other tool to add up your income, debts, interest rate, etc. The price of the | more...

 

FHA Loan Rules in HUD 4000.1 on Maximum Loan Amounts

When the FHA and HUD published HUD 4000.1, that document became the comprehensive rule book for FHA single family home loans and refinance loans. Many policies were updated, amended, altered or restated and there’s no way to compare all the changes with the previous version of FHA home loan rules found in HUD 4155.1 and HUD 4155.2. With that in mind we have been examining important sections of HUD 4000.1 to learn what the most up-to-date FHA loan policies are. Today we’re examining the FHA loan rules for maximum loan amounts. HUD 4000.1 begins this section by explaining the basics: “A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits, the nationwide area mortgage limit, or the maximum Loan-to-Value (LTV) ratio. The maximum LTV ratios | more...

 

FHA Loan Rules For Home Sales: HUD 4000.1

The FHA Single Family Mortgage Loan program is regulated by the rules published in HUD 4000.1. These rules cover everything from appraisal requirements and FICO score minimums to Fair Housing requirements and responsibilities. HUD 4000.1 also establishes requirements for the home loan transaction–for example, did you know FHA mortgage loan rules have specific parameters for who can sell the property to the borrower purchasing with an FHA mortgage? HUD 4000.1 clearly states: “To be eligible for a mortgage insured by FHA, a Property must be purchased from the owner of record. The transaction may not involve any sale or assignment of the sales contract.” How is the lender required to establish that the seller is the owner of record? FHA loan rules say the lender must, “obtain documentation verifying that | more...

 

FHA Loan Questions: Are Military Members Eligible For FHA Mortgages?

One common question about FHA loans involves whether or not military members are eligible to apply. Some military members may choose FHA mortgage options over VA loan benefits depending on circumstances, what do FHA loan rules tell lenders about veterans and currently serving members of the U.S. military? HUD 4000.1 contains the rules that apply in these cases. One of the reasons some could mistakenly assume military borrowers might not qualify for FHA mortgages has to do with the FHA’s occupancy rule for new purchase loans and refinances. But FHA loan rules include the following on occupancy for military applicants: “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 | more...

 

FHA Mortgage Loan Down Payment Rules

FHA loans require a minimum down payment of 3.5%–that’s typical for many FHA mortgages. In some cases, depending on the nature of the loan and the borrower’s financial qualifications and FICO scores, the required down payment may be higher. But no matter what the down payment amount might be (and it will vary from loan to loan) the FHA has specific rules governing the sources of and verification for down payment funds. The FHA loan rulebook for single family mortgage loans is HUD 4000.1, which refers to the down payment as a “minimum required investment”: “Minimum Required Investment (MRI) refers to the Borrowers contribution in cash or its equivalent required by Section 203(b)(9) of the National Housing Act, which represents at least 3.5 percent of the Adjusted Value of the | more...

 
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FHA Loan Rules In HUD 4000.1: Inducements To Purchase (Part 2)

In our last blog post, we discussed FHA loan rules found in HUD 4000.1 on inducements to purchase and what happens if a seller or other interested third party contributes more toward closing costs or other allowed expenses than is allowed by FHA mortgage loan rules. According to HUD 4000.1, “Inducements to Purchase refer to certain expenses paid by the seller and/or another Interested Party on behalf of the Borrower and result in a dollar-for-dollar reduction to the purchase price when computing the Adjusted Value of the Property before applying the appropriate Loan-to-Value (LTV) percentage.” This information is helpful–but what constitutes an inducement to purchase? HUD 4000.1 lists them–they include but are NOT limited to the following: –contributions exceeding 6 percent of the purchase price; –contributions exceeding the origination fees, | more...

 

FHA Mortgage Loan Rules In HUD 4000.1: Inducements To Purchase

There are many rules for FHA home loans that govern what buyers and sellers can and cannot do. For example, the borrower must make a minimum down payment, and the source funds from that down payment cannot come from credit card cash advances or payday loans. But there are rules for the seller (and interested third parties) as well. Did you know FHA loan rules govern what a seller can and cannot contribute towards the purchase of the property? In some cases there are contributions that are permitted but only within certain limits. From HUD 4000.1, we learn the following: “Interested Parties may contribute up to 6 percent of the sales price toward the Borrowers origination fees, other closing costs and discount points. The 6 percent limit also includes: –Interested | more...

 

FHA Mortgage Loan Limits For New Purchase Loans And Refinance Loans

We’ve gotten some questions recently about FHA mortgage loan amounts, so it seemed like a good time to post the FHA loan rules found in HUD 4000.1 about how maximum loan amounts are calculated. There are FHA loan guaranty limits and FHA mortgage loan amounts–the two shouldn’t be confused as FHA mortgage loan guaranty limits refer to the amount of money the FHA will guarantee for the loan, whereas the maximum loan amount is the highest amount for a specific transaction that the lender/FHA loan rules will allow. FHA loan rules say the maximum can be affected by the type of transaction. You can find the FHA maximum guaranty amounts for your housing market at the FHA official site: https://entp.hud.gov/idapp/html/hicostlook.cfm. HUD 4000.1 says of maximum loan amounts: “A Mortgage that | more...

 

FHA Loan Questions: Maximum FHA Loan Amounts For Building A Home

A reader asked us a question recently in the comments section about FHA new construction loans: “My husband and I will be building a home, we have land that we are interested in, what is the max for a construction loan and build that FHA gives?” To be clear, the FHA itself does not issue loans–the borrower must find a participating FHA lender willing to offer a new construction loan. When it comes time to determine the maximum loan amount for new construction mortgages, the FHA loan rulebook has specific instructions for the loan officer. How does the FHA instruct lenders to determine the maximum mortgage amount in these cases? According to HUD 4000.1: “The maximum mortgage amount is calculated using the appropriate purchase Loan-to- Value (LTV) percentage of the | more...