Articles Tagged With: FHA Loan

September 25, 2023

Buying A House With More Than One Living Unit

FHA mortgages are not limited to single-unit homes. Did you know that it’s possible to buy a home with an FHA loan that has as many as four living units? First-time home buyers looking for smaller homes might not have considered using an FHA mortgage to buy a house with multiple living units. And doing so is not for everyone. But for those who do need that larger home, it’s an option worth looking into for more than one reason. Multi-Unit Home Purchases Using An FHA Mortgage? FHA loan rules in HUD 4000.1 permit the purchase of house with up to four living units without changing the basic loan approval structure. You won’t be asked to make a down payment larger percentagewise than for a single-unit home. That said, a | more...

September 15, 2023

What You Should Know About FHA Energy Efficient Mortgages

By Bruce Reichstein

The FHA Energy Efficient Mortgage (EEM) loan program was started back in 1992 as a pilot program in five states. A few years later, the program was expanded nationwide. According to the FHA official site: “EEM is one of many FHA programs that insure mortgage loans–and thus encourage lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first-time homebuyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get).” Borrowers who use FHA loans can add the required FHA upfront mortgage insurance premium to their home loan or pay in cash at closing. There is a monthly premium paid as part of the monthly mortgage payment. The FHA EEM is an add-on to a standard | more...

September 13, 2023

Tips You Should Know About FHA Loan Down Payments

By Joe Wallace

Down payment issues may vary depending on the home loan you select, whether it is an FHA loan, a VA mortgage, or a USDA construction loan, but some things are common for all mortgages where down payment money goes. Do You Need A Down Payment Gift? Get It In Writing A participating FHA lender can accept down payment gift funds from a variety of sources. The money can come from family, friends, and employers. But these gift-givers must also provide a letter detailing where the cash comes from and that it does not come from unapproved sources, which we will explore below. The down payment gift letter must explain where the money is from, such as cash saved at home, investments that have been cashed in for the gift, or | more...

September 7, 2023

Preparing For An FHA Home Loan

By Joe Wallace

We get a lot of questions about preparing for an FHA loan. Some of the most popular topics? Credit scores, what it takes to get loan approval, and whether it’s good to wait out the current high interest rates we are experiencing at press time in the fall of 2023. There are many sources of credit advice, especially advice on how to prepare your credit ahead of a major application like an FHA mortgage. But what do the credit agencies themselves say about how to become more creditworthy ahead of a home loan application? How should you prepare? Improve Your Chances At Home Loan Approval There is some interesting advice from one of the “big three” credit reporting agencies, Experian. That credit agency recommends you start as early as possible, | more...

August 18, 2023

What To Ask An FHA Lender

By Joe Wallace

First-time home buyers examining their FHA home loan options might wonder where to start when it is time to shop around for the right lender. Here are some important questions to ask when you compare banks and home loan options. What Are My Home Buying Options? Approved Property Types Are you looking for a unique type of home like a tiny house? If you seek an unusual property type you’ll need to see whether such a home is approved or acceptable to the lender. Some financial institutions won’t issue loans on unconventional property types, others may have caveats to know before you agree. In general, FHA mortgages are better for more conventional housing types such as condos, townhomes, and manufactured houses. You will have a better chance of finding a | more...

August 7, 2023

FHA Loan Reader Questions: Foreclosure Wait Periods

By Joe Wallace

Here is a variation on a common reader question. “I had a foreclosure on my house. What is the waiting period before I qualify for an FHA mortgage?” The first thing to do is call the FHA at their toll-free number, 1-800 CALL FHA, and ask for a referral to an FHA/HUD-approved housing counselor in your local area. A housing counselor can assist in areas like this with advice on how to proceed toward becoming a homeowner once again after a foreclosure, bankruptcy, job loss, or other issues. The answer to the reader’s question varies greatly depending on circumstance, lender standards, and whether or not the home foreclosed upon was purchased with an FHA mortgage. While the FHA loan program does include options for borrowers who have experienced a qualifying | more...

August 4, 2023

FHA Loan FICO Score Requirements

By Joe Wallace

“Is my credit score good enough to get a mortgage?” That is among the most common questions about FHA loans and it’s easy to understand why. In times of high interest rates and competitive housing markets, every advantage counts. Do borrowers with lower credit scores still have a shot at getting a home loan? FHA loan rules for single-family home loans technically permit FHA loan approval for borrowers with FICO scores above 500. If your credit scores are within the 500-579 range you may be asked to make a higher down payment. But if your FICO scores are 580 or higher you qualify by FHA standards for the lowest 3.5% down payment. Here is the official FHA loan FICO score table from the FHA official site which lists the FICO | more...

July 21, 2023

Will Your FHA Home Loan Be Approved?

By Joe Wallace

Will your FHA home loan be approved or denied? There are several reasons why your loan application could be turned down, and some of those reasons have more to do with the property than with the borrower’s credit history or FICO scores. And in some cases, getting turned down for a mortgage is the borrower’s fault due to credit history or FICO score issues. But what about when the borrower’s credit, employment, and other qualifying factors are acceptable to the lender, but the home loan application is turned down anyway? For some, it could be a question of the property’s condition, location, or type. Location Counts Some don’t realize at first that to be approved for an FHA residential home loan, the property cannot be situated within a specific range | more...

July 14, 2023

FHA Loan Options To Consider

By Joe Wallace

There are many options for those who want to buy or refinance a home using an FHA mortgage. Did you know that FHA loans feature a choice between fixed and adjustable rate loans, and that you can add energy efficient features to the home you buy or refinance? These options and many more are option to qualified borrowers who get approved for FHA mortgages. The choices you have with a new purchase FHA loan are varied. In addition to the type of loan–fixed rate mortgage, adjustable rate mortgage, growing equity mortgage loans and others–you also have a choice of housing available to you under the FHA loan program. You can select a typical suburban home, but are not limited to doing so. FHA Loan Types: Condos, Manufactured Homes There are | more...

July 11, 2023

FHA Loan Options Post-Bankruptcy

By Joe Wallace

There is a common reader question that goes something like this: “I had a bankruptcy discharged recently. How long do I have to wait to purchase another home? I have been working on my credit and improving my scores.” Post-bankruptcy, a borrower must work hard to establish the best credit possible in order to qualify for a new home loan. Lenders may be willing to work with borrowers with credit scores starting at around 620 or higher. But credit isn’t the only factor determining how soon after bankruptcy you can apply for a home loan. The nature of a borrower’s wait time to apply after bankruptcy depends on the nature of the bankruptcy. The rules governing this are found in the FHA Single-Family Lender’s Handbook, which advises that bankruptcy “does | more...