June 25, 2017

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Articles Tagged With: FHA Loan Questions

FHA Loan Questions: Credit Score

Do FHA loan rules require more than one credit score for a borrower to qualify for a mortgage loan? That’s what one reader wants to know this week: “Can you tell me if FHA can lend if someone only has one score? It’s a 621 score. This home buyer had a short sale four years ago and did not rebuild credit as she decided not to get any credit cards. She has a debit card and that is it. Please advise if one score would be accepted?” FHA loan rules for credit score requirements are found in HUD 4000.1, the FHA single-family home loan rule book. HUD 4000.1 has instructions to the lender for credit score requirements which include the following about what is called the Minimum Decision Credit Score: | more...

 

FHA Loan Appraisal Questions: Well Water Guidelines

A reader asked us an FHA loan appraisal question this week about a recent post we did on water quality issues. “We have been requiring a safe water test to verify the water standards are meet per the guidelines but we now have an Loan Officer arguing that it is not required unless the appraiser notes an issue. Is a water test really not required have I been reading the guidelines wrong since 2015?” The “we” in this case would seem to be a participating FHA lender. Is the loan officer mentioned in the question correct? We turned to the relevant passages in HUD 4000.1 to reaffirm what the FHA loan rule book says about water quality. “The Mortgagee must confirm that a connection is made to a public or | more...

 
what is mortgage insurance and how does it work?

FHA Mortgages For Multi-Unit Properties

A reader asked us a question this week in the comments section about FHA mortgages for properties with multiple units. “I want to buy a 6 residential unit apartment building with a very small store front commercial space on the property (computer repair shop that takes up about 15% of the property space) I plan on living in one of the apartment units. Is there an FHA loan out there for this situation?” FHA mortgages under the single family loan program do allow FHA loans to qualified borrowers for multi-unit properties. The rules for these purchases are found in HUD 4000.1, which states: “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 | more...

 

FHA Appraisal Rules: Water Purification Systems

What are the FHA appraisal rules for properties served by water purification systems? A reader asked us a question about that recently: “Im interested in a property that has a UV purification system. Does that qualify under an FHA loan?” A quick look FHA appraisal rules in this area reveals no references that specifically, at the time of this writing, mention UV purification. Instead, they address water purification in general, requiring that any such systems meet basic standards. What are those standards? From HUD 4000.1 we learn that the lender has a responsibility to the borrower in such cases” “If a Property does not have access to a continuous supply of safe and potable water without the use of a water purification system, the Mortgagee must ensure that the Property | more...

 
FHA loan down payment

Part Time Income: FHA Loan Rules

What are the rules for using part time income to qualify for FHA loans? A reader asked us a question on that topic in our comments section this week: “I have a client that worked full time for a company for eight years. In the last eight months he went to half time. Why cant we use this income since hes been at the same employer for more than 2 years?” Instructions to the lender on this issue are found in HUD 4000.1. There, we learn that for all income sources, the lender is required to do some calculations. “For employees who are paid hourly, and whose hours do not vary, the Mortgagee must consider the Borrowers current hourly rate to calculate Effective Income. For employees who are paid hourly | more...

 

Work Absences And FHA Loans

Can FHA loans depend on a borrower not having medical leave or temporary absences from work? That’s what one reader wants to know this week: “I was out from work one month do to a job related injury. Can I get an FHA loan? How long I have to wait to qualify? I have been working for the same company three years.” FHA loan rules may be non-specific on certain types of circumstances, preferring to defer to state law, lender standards, or other guidelines. However, this situation is not one of those. HUD 4000.1 specifically addresses the issue of temporary absences from the applicant’s place of employment. HUD 4000.1 describes this as a “temporary reduction of income”, stating: “For Borrowers with a temporary reduction of income due to a short-term | more...

 

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...

 

FHA Reverse Mortgages: An Appraisal Question

A reader asked us a question in the comments section recently about FHA reverse mortgages and the appraisal process for them. “We have a detached garage with a 500 square foot “mother-in-law unit” on top. Will this structure be included in the appraisal in which the reverse mortgage is based on?” FHA loan rules for appraisals are found in HUD 4000.1. Before quoting the rules for appraising what the FHA loan rule book classifies as an “accessory dwelling unit” or ADU, it’s important to remember that state law, and certain building code requirements may also apply. FHA appraisals include determining whether an outbuilding is an ADU or not. The FHA definition of an ADU is as follows: “An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, | more...

 

FHA Loans and Alimony/Child Support

A reader asked a question in our comments section about FHA loan rules for alimony and child support payments: “What is a voluntary payment agreement? I am divorced its a closed case and I actually pay a little more than what we agreed to in the official settlement agreement. Shes now trying to buy a house and will be dealing with the whole proving amount of alimony/child support and its very difficult to amend a closed case.” “If we have an agreement between ourselves for (x) dollars/month for (x) amount of time and have this notarized, would this constitute a voluntary payment agreement?” The reader is referencing an earlier blog post from 2013, which includes the following about how the lender may consider alimony and child support as part of | more...

 

FHA Loans And The 100 Mile Rule: A Reader Question

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...