December 12, 2017

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Articles Published in: May 2014

FHA Loan Rules: Adding Repairs To The Sale Price Of The Home

FHA loan rules for new purchase home loans include regulations on how the cost of repairs can be added to the sale price of the home to be purchased with an FHA mortgage. Th rules for this are found in HUD 4155.1, Chapter 2 Section Five, which states: “Repairs and improvements may be added to the sales price before calculating the mortgage amount when the • repairs and improvements are required by the appraiser as essential for property eligibility, and paid by the borrower, and • sales contract or addendum identifies the borrower as responsible for payment, and completion of the repairs.” FHA loan rules in this section state that, “Only repairs and improvements required by the appraiser may be included.” How does this all work? Chapter Five has a | more...

 
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FHA Loans and Interest Rates: The Interest Rate Lock

Under the rules of the FHA loan program, borrowers and lenders negotiate together on interest rates for the FHA loan. The FHA does not set interest rates, and it’s also not responsible for regulating them aside from a general requirement that the rates be comparable to similar types of loans. In recent times you may have noticed headlines and advertising discussing the idea that mortgage loan rates in general are as low as they’ve been in some time. At the moment it’s a very good time to be exploring your options as an FHA loan applicant or refinance loan applicant. Rates have recently hit eleven month lows and qualified borrowers with excellent FICO scores have found rates as low as 4.0% or even lower depending on what’s being offered by | more...

 

FHA Loan Fees: A Reader Question

A reader asks, “Are there any fees associated, with a FHA loan? I was contacted after inquiring online about a loan and the representative informed me that it would be a fee of $11.00 for credit reports and a fee of $149.00 which normally would cost $350.00 for the application process and additional fees of about $49.00 until credit score was at least 620..need to know if this is legitimate before I pay these fees.” FHA loans do involve fees. A reading of HUD 4155.1 Chapter Five reveals the following: “Lenders may charge and collect from borrowers those customary and reasonable costs necessary to close the mortgage loan. Borrowers may not pay a tax service fee.” Chapter Five also states, “FHA no longer limits the origination fee to one percent | more...

 
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FHA Loan Income Rules: A Reader Question

A reader asks, “Whats the least amount of income for an FHA home loan?” This is a common question, but the real question a borrower should be asking in these cases has more to do with how much money goes out in payment to financial obligations versus how much money is coming in. That is known in lending circles as the debt-to-income ratio. The specific answer to the borrower’s question here is that there is NO minimum income requirement listed in the FHA loan rulebook. “FHA’s mortgage programs do not typically have maximum income limits for qualifying, although you must have sufficient income to qualify for the mortgage payment and other debts.” That’ is a quote from according to a HUD publication titled “100 Questions And Answers About Buying a | more...

 

FHA Loan Credit Scores: A Reader’s Question

A reader asks, “Hello, my credit score is 540, I’m a single parent, husband left me with a foreclosed house and a debt of about $135,000+ just from the house no credit cards. I have been separated for 3 years. I want to purchase a home again. Are there any programs for a person like me in this situation?” Borrowers who need assistance with issues like these should first call the FHA at 1-800 CALL FHA to request a referral to a HUD-approved housing counselor who may be able to assist with advice and pre-purchase counseling. There are no specific FHA programs that are offered to borrowers in a specific category (bad credit, foreclosure, bankruptcy, etc) but the FHA and HUD have recently announced a new pilot program aimed at | more...

 

Happy Memorial Day!

Today we pause our usual posts about FHA loans and related issues, in honor of Memorial Day. We’ll resume our regularly scheduled posts and answers to reader questions tomorrow. Thanks for reading and be sure to thank the veterans in your life for all the service and sacrifices made in the name of freedom. To our veterans, THANK YOU for serving!

 

FHA Loan Requirements For Occupancy: What The Rulebook Says

When you want to purchase a home using a single-family FHA home loan, you should know what the FHA loan program’s requirements are for occupancy of the property. Did you know you are required as a borrower to certify you’ll use the home as your personal residence? FHA loan rules in HUD 4155.1 explain these rules and how they apply to the borrower. There are many questions about occupancy including whether or not a borrower can purchase a single family home and rent out individual rooms, or whether a multi-unit property can be obtained and rented out. Essentially, the FHA single-family home loan program rules state the following: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property | more...

 

FHA Loan Debt Ratios and Student Loans: A Reader Question

A reader asks, “My student loans are in my name, because my parents wanted to get my credit/payment history started early, but they pay the loans…It is a blessing that they pay them every month, but if I went to get an FHA mortgage for a first time home buyer would I have to count that $350.00 per month loan expense or could they write a letter or prove that they are actually the ones that get the bill and pay it? This really makes a difference when I check the amount I could potentially be approved for.” The answer to this question may depend on the lender, but in general the student loan debt is in the borrower’s name and that is the key to understanding the issue. The | more...

 

FHA Loan Rules: Employment

When you apply for an FHA mortgage loan, you’re required to submit a variety of data including your employment history. It’s the FHA loan officer’s job to insure an applicant has sufficient income to afford the loan, and to make sure that income is likely to continue. How does the lender do this? FHA loan rules spell out clearly what’s to be done–HUD 4155.1 Chapter One, Section B explains how it works. To begin: “The lender must obtain the most recent pay stub showing year-to-date earnings of at least one month, and one of the following to verify current employment: • a written VOE verbal verification of employment, or • electronic verification acceptable to FHA.” The pay stub is documentation that the applicant is currently employed. But when it comes | more...

 
FHA Loan Credit Score

FHA Loan Down Payment Rules: Acceptable Sources

In a recent blog post we were asked about FHA down payment requirements–is there such a thing as a “no down payment” FHA loan? Some borrowers might mistake the VA loan program’s zero down payment option for something the FHA officers, but the truth is that FHA loans require a minimum of 3.5% down for single-family home loans. Not only that, but the money for your down payment has to be documented and come from an acceptable source. The reason for this is twofold–it prevents borrowers from over-leveraging themselves with cash withdrawls or cash advances on credit cards (credit card cash advances can’t be used to make down payments on an FHA home loan) and it keeps people with a financial interest in the transaction from loaning money for the | more...