November 17, 2017

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Articles Published in: September 2017

What Are The Property Requirements For An FHA Loan?

FHA Loans, Income Verification, And Rental Income (Part Two)

In our last blog post, we discussed some basic FHA loan rules about using rental income to qualify for an FHA mortgage loan. Some borrowers are interested in purchasing a multi-unit property that they intend to live in as their primary residence, with the goal of renting out unused living units. FHA loan rules permit this only when the borrower lives in the property; you cannot plan to be an absentee landlord and expect FHA loan approval. In our last blog post, we wrote: “It is reasonable to expect that such a borrower would want to know if she could use projected rental income from that arrangement as ‘verifiable income’ for the purposes of loan approval. Can the borrower reasonably expect a lender to approve of income from this rental | more...

 
FHA Loans, Income Verification, And Rental Income From Other Properties

FHA Loans, Income Verification, And Rental Income From Other Properties (Part One)

In a previous blog post, we discussed the issue of a borrower using projected rental income from the property to be purchased with an FHA mortgage. Some borrowers are interested in purchasing property that they intend to live in as their primary residence, while planning on renting out unused living units in a multi-unit property. It is reasonable to expect that such a borrower would want to know if she could use projected rental income from that arrangement as “verifiable income” for the purposes of loan approval. Can the borrower reasonably expect a lender to approve of income from this rental situation when calculating the borrower’s debt-to-income ratio? This is possible in situations that meet FHA loan approval; some scrutiny will be given to a borrower’s rental income history or | more...

 
What are the minimum property standards for an FHA loan?

Can I Get a Single Family FHA Loan For A Multi-Unit Home?

Can I get an FHA single family loan for a multi-unit home? Some borrowers get confused by the wording in the name of the FHA Single Family Home Loan program. It’s easy to assume that FHA single family mortgages are for one-bedroom houses, but that is definitely not the case. FHA loans are approved for homes that feature as many as four living units-a four unit property can definitely be financed with an FHA loan assuming the borrower is qualified to be approved for the mortgage. One-to-four unit properties purchased with FHA mortgages must be the primary residence of the borrower-you must agree to occupy the home purchased with an FHA mortgage loan usually within approximately two months after loan closing (unless the borrower makes other arrangements with the lender | more...

 
What are the FHA loan rules for investment properties?

What Are The FHA Loan Rules For Investment Properties?

FHA home loans have “approved property” rules found in HUD 4000.1, the FHA loan handbook for Single Family Mortgage loan transactions. These rules include a list of approved uses for FHA mortgages, approved property types, and the kinds of property which can never be purchased with an FHA single family mortgage. First and foremost, FHA loans are intended for owner-occupiers, which means that FHA mortgages for vacation homes and other intermittent-occupancy purposes are not possible. Borrowers cannot use an FHA loan to open a bed and breakfast establishment, or to purchase a timeshare, condohotel or similar property. FHA mortgage loan rules in HUD 4000.1 also state the following, intended to prevent the use of single family home loans for business purposes: “FHA will not insure more than one Property as | more...

 
What Are My FHA Loan Options For Buying A New Home?

What Are My FHA Loan Options For Buying A New Home?

What are my FHA loan options for buying a new home? FHA loans are attractive to many house hunters thanks to lower down payment requirements, an credit standards that can be more forgiving than some conventional mortgages. The ability to freely sell the home or allow the FHA mortgage to be assumed (with lender participation) by someone else should the need arise is also a good, consumer-friendly feature. There are a few misconceptions about FHA home loans including the requirements to qualify and types of property available to be purchased with an FHA mortgage. Fortunately, some of those misconceptions have to do with things the borrower thinks cannot be done for some reason, but are actually options in the borrower’s favor. FHA Loans: Not Just For First Time Buyers FHA | more...

 
Can I finance my FHA loan up front mortgage insurance premium?

Can I Finance My FHA Loan Up Front Mortgage Insurance Premium?

Can I finance my FHA loan Up Front Mortgage Insurance Premium (UFMIP)? And how does it affect my mortgage loan? These are questions many ask, unsure of whether FHA mortgage loan limits include the UFMIP and how they are allowed to pay. FHA Up Front Mortgage Insurance Premiums May Be Financed FHA loan rules in HUD 4000.1, the FHA loan handbook, state clearly that FHA UFMIP may be financed. It will be included in the final loan amount at closing time. UFMIP Must Be Financed Or Paid In Cash HUD 4000.1 instructs the lender to either collect the Up Front Mortgage Insurance Premium in cash at closing time, or have it included into the loan amount. However, the borrower must pay 100% either way-you cannot finance half the amount and | more...

 
How Does My Credit Score Affect My FHA Mortgage Loan?

How Does My Credit Score Affect My FHA Mortgage Loan?

How does my credit score affect my FHA mortgage loan? There are several areas where FICO scores may affect how much a borrower pays including interest rates, down payment issues, and more. FHA Loan Credit Score Rules: Two Standards There are two basic sets of rules and requirements governing borrower credit scores. One set of rules is found in HUD 4000.1, and gives the FHA Single Family Home Loan program minimum requirements for credit scores and how they affect a borrower’s down payment requirements. The other set of rules and regulations are those of the individual participating lender. Your chosen lender may have higher standards than FHA minimums, and this is permitted by law as long as those higher standards conform to Fair Housing Act policies and other federal regulations. | more...

 
Which of my debts are evaluated for an FHA home loan?

Which Debts Are Evaluated For My FHA Home Loan?

Which of my debts are evaluated for an FHA home loan? Borrowers sometimes get nervous about this issue, especially if they are concerned about carrying too much debt to qualify for a home loan. FHA loan rules governing how a borrower’s debt load must be reviewed by the lender are found in HUD 4000.1. One section titled “General Liabilities and Debts” states: “The Mortgagee must determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation.” The basic answer to the question may depend on whether the lender is manually underwriting the mortgage loan or using the TOTAL system to evaluate the application. TOTAL is an “automatic” underwriting tool, and when using this tool, the lender is instructed as | more...

 
HUD Takes Measures To Speed Up Hurricane Recovery Efforts

HUD Announces Further Disaster Relief For U.S. Virgin Islands

The Department of Housing and Urban Development has announced disaster relief for St. Croix Island, the latest of the U.S. Virgin Islands to be declared a major federal disaster area. There have been a string of announcements for areas in Puerto Rico and elsewhere as the damage has been surveyed and, in some cases, when additional concerns are raised by new tropical storms and hurricanes. St. Croix is now able to receive federal disaster assistance from FEMA, HUD, and the FHA among other agencies. Home owners in presidentially-declared major disaster areas should contact FEMA as soon as possible to determine what benefits and relief are available to them. Those who own property damaged in the natural disaster should contact their lenders and insurance agents to determine next steps in recovery, | more...

 
HUD Takes Measures To Speed Up Hurricane Recovery Efforts

HUD Announces Disaster Relief For Puerto Rico

The Department of Housing and Urban Development has announced federal disaster relief for natural disaster victims in Puerto Rico. According to a press release on the FHA/HUD official site, the following municipalities have been declared major disaster areas: Aguas Buenas, Aibonito, Arecibo, Arroyo, Barceloneta, Barranquitas, Bayamón, Caguas, Canóvanas, Carolina, Cataño, Cayey, Ceiba, Ciales, Cidra, Coamo, Comerio, Corozal, Culebra, Dorado, Fajardo, Florida, Guayama, Guaynabo, Gurabo, Humacao, Jayuya, Juana Díaz, Juncos, Las Piedras, Loíza, Luquillo, Manati, Maunabo, Morovis, Naguabo, Naranjito, Orocovis, Patillas, Ponce, Rio Grande, Salinas, San Juan, San Lorenzo, Santa Isabel, Toa Baja, Toa Alta, Trujillo Alto, Utuado, Vega Alta, Vega Baja, Vieques, Villalba and Yabucoa. Those in a federally declared disaster area have options for relief from agencies including FEMA, the FHA, and HUD. According to the press release, “HUD’s | more...