Articles in Category: Condominium Mortgage

April 7, 2017

FHA Loan Rules: Borrowers, Co-Borrowers, Co-Signers

Do you know what the FHA loan rules are for borrowers, co-borrowers, and/or co-signers? What are the requirements for each and how is your lender required to proceed with each? The FHA home loan rule book for single family mortgages, reverse mortgages, and refinance loans is HUD 4000.1 It instructs the lender that borrowers have an occupancy requirement-the borrower must agree to take ownership of the home and use it as her or his primary residence after loan closing. Usually the borrower will have to move in within 60 days of closing. HUD 4000.1 also tells the lender that borrowers may only purchase homes with FHA loans withing the United States or its’ territories. Purchase of non-U.S. real estate is not permitted with an FHA mortgage. All parties to be | more...

November 10, 2016

FHA Condo Loans: Owner/Occupancy Requirements

By Bruce Reichstein

FHA loans include the option to fill out a loan application for condo loans. Borrowers can apply to purchase a condo unit as long as the condo project is either on the FHA approved list or is added to that list. Recently we reported on the FHA’s change in rules for occupancy requirements for approval of condo projects. According to an FHA mortgagee letter, “In accordance with the passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA), the Federal Housing Administration (FHA) is required to provide guidance on the percentage of owner occupied units required to obtain condominium project approval.” To be put on the approved FHA condo loan list, the project must meet specific requirements including an owner/occupier ratio. That ratio is addressed in that mortgagee letter | more...

November 9, 2016

FHA Loan Options: What You Should Know

By Joe Wallace

Are you thinking about purchasing a home? Or refinancing your current home loan? FHA mortgage loans and refinance loans offer a variety of options. For new purchases, an FHA mortgage loan allows qualified borrowers to purchase typical suburban homes, but also condo units, town homes, and manufactured homes. Any property that has a permanent foundation or will be affixed to a permanent foundation at closing time may be eligible for an FHA mortgage. (All homes considered for purchase with an FHA loan are subject to an appraisal and must meet basic FHA standards.) Heading 2 For new purchase loans, borrowers can choose a fixed interest rate mortgage or an adjustable rate loan. Borrowers who choose adjustable rate mortgages will be offered an introductory rate, and overall your FICO scores and | more...

November 1, 2016

FHA Condo Loans: New Requirements

By Joe Wallace

The FHA official site has updated owner/occupier requirements for FHA condo loans. In a press release issued in late October, the agency announced changes effective immediately; “The Federal Housing Administration (FHA) today announced that, under certain circumstances, it will lower its required owner-occupancy standard for approved condominium developments…FHA currently requires that approved condominium developments have a minimum of 50 percent of the units occupied by owners.” The press release adds that “this requirement can be lowered to 35 percent for existing condo developments provided the project meets certain conditions.” The press release states that The Housing Opportunity through Modernization Act of 2016 (HOTMA) included instructions to the FHA, “to issue guidance regarding the percentage of units within an approved condominium development that must be owner-occupied. While having too few owner-occupants | more...

October 4, 2016

FHA Loan Facts And Fiction: First Time Home Buyers

By Joe Wallace

First time home buyers come to the FHA loan process with many questions. There are some long-held misconceptions about FHA mortgages that borrowers should know long before they fill out a loan application. Let’s examine some of them. One myth about FHA loans, and one of the most common, is that the FHA itself lends money to loan applicants. This is not true. Instead, the borrower must find a participating FHA lender, who has been certified by the FHA to issue home loans under the FHA single-family loan program. Another misconception has to do with the nature of the FHA loan program itself, which offers affordable home loans to all qualified applicants regardless of their status as a home buyer. That means that first time home buyers and those who | more...

September 30, 2016

FHA Proposes New Condo Approval Processes

By Joe Wallace

A recent press release on the FHA official site announces new proposals for FHA condo loan approval procedures. According to HUDNo.16-146, there are significant alterations to current FHA loan policy that are currently under review. “In response to changing conditions in the condominium market, the Federal Housing Administration (FHA) today proposed new regulations governing the approval process for condominium developments. FHA proposes to reinstate single unit approvals in unapproved condominium developments and to require condo projects to recertify their approval status every three years rather than the current two-year requirement.” Individual condo units in projects that are not currently on the FHA approved list would, under these proposed changes, have a better chance of getting single-unit loan approvals if the units meet FHA criteria including (but not limited to) the | more...

Where do you get an FHA construction loan?

September 28, 2016

FHA Construction Loans: A Reader Question

By Joe Wallace

A reader asks, “Does FHA include loans for a construction to permanent mortgage?If so, can the construction be done by a licensed general contractor that does custom builds or does it have to be done by a licensed general contractor that only does spec builds? Is there other criteria/inspections that are specific to construction to permanent mortgage that are specific to an FHA loan?” This is a complex question, and FHA construction loans have issues far too numerous to address in a single blog post, but we’ll tackle the basics. FHA loan rules do allow for loans for new construction/proposed construction. This type of loan is more complex than a typical FHA mortgage and potential applicants are encouraged to discuss this option with a loan officer to learn what may | more...

August 9, 2016

FHA Home Loans: A Variety Of Options

By Joe Wallace

There are many different types of real estate available to purchase or refinance with an FHA single family home loan. Did you know that FHA loans are not limited to traditional suburban-type housing? The options you have are as diverse as the kinds of real estate you might consider purchasing. For example, while an existing construction suburban home is definitely an option with FHA loans, you can also consider a new construction home. The difference between new construction and existing construction can be technical; new construction properties have generally been completed for a year or less and have never had an owner. So while you may not be interested in a “build-to-suit” new construction loan, you may be able to get a new construction loan for a property that is | more...

July 28, 2016

Conventional Loans Versus FHA Mortgages

By Joe Wallace

What’s the major difference between FHA mortgage loans and conventional loans? Actually there are several, but the first and most basic difference is that an FHA mortgage is guaranteed by the government, where a conventional loan is not. The government’s backing of an FHA mortgage makes the loan less of a risk to the financial institution offering you a line of credit to purchase your home. And because the loan is backed by the government, FHA mortgages feature lower down payment requirements than many conventional mortgages. You may find conventional loans requiring 10 or even 20 percent down, where an FHA mortgage for qualified borrowers with FICO scores at 580 or above may qualify for maximum financing. That means a down payment requirement of only 3.5% of the adjusted value | more...

July 8, 2016

FHA Loans Versus Conventional Loans

By Joe Wallace

Here’s the Scoop on Conventional Loans from FHA.com on Vimeo. What are the differences between FHA home loans and conventional loans? There are several, some features of mortgage loans can vary depending on the lender, and state law may also affect how your home loan is handled depending on circumstances, but there are a few very important general differences to keep in mind when comparing FHA loans to conventional loans. The first difference is the basic nature of the loan itself. Conventional loans are not backed by the government, unlike FHA home loans where the FHA guarantees a portion of the loan to make it more attractive to the lender to issue credit. In the event that a borrower defaults on an FHA loan, the lender and the FHA have | more...