Articles in Category: FHA Loan Types

November 3, 2022

Do You Need A Co-Signer For An FHA Mortgage?

Some house hunters are worried they may not be able to qualify for a home loan on their own and feel the need to add a co-signer. Other borrowers are buying a home with someone else (often significant others or spouses) and need to have more than one name on the mortgage. FHA home loans (yes, refi loans too) allow one borrower or multiple borrowers. The key to understanding how loan approval works for an FHA mortgage is to remember that all parties to be obligated on the mortgage loan must be able to financially qualify. FHA Borrowers And Co-Borrowers FHA loan rules instruct the lender that to be considered eligible for an FHA home loan or refinance loan, “…all occupying and non-occupying Borrowers and co-Borrowers must take title to | more...

October 31, 2022

Important Features To Consider When Shopping For A New Home

By Bruce Reichstein

Are you new to house hunting? There are things to look for when considering homes to buy with an FHA mortgage. These are features that often may enhance the home and make it more efficient. Once you are used to shopping around for a home, you can establish a checklist to remind you as you review each property. Ceiling Fans Not all homes come with ceiling fans. Are you buying a home in a warmer or more humid climate? A lack of ceiling fans can be a drawback; homes that do not have them installed might have other issues such as mold or mildew, but this will depend greatly on how the individual house was maintained. Exterior Lighting Exterior lights can provide additional safety, and not just to prevent burglaries | more...

October 28, 2022

Buying A Home When Interest Rates Are High

By Joe Wallace

Are you considering your FHA home loan options? You aren’t alone if you’re considering the option of waiting to buy until mortgage rates drop from current highs. How high have the rates gone? In the closing days of October 2022, the New York Times reported interest rates hit the 7% range for the first time since 2002. Do you worry that such high rates are here to stay? You couldn’t be blamed for thinking it’s a safer bet to hold off on buying a home right now. The Fannie Mae Housing Forecast for 2022 includes the possibility that mortgage loan interest rates might settle into the four percent range sometime at or near the second quarter of 2023. If that becomes a reality, could we see an increase in interested | more...

October 25, 2022

FHA Rehab Loans: The Limited 203(k) Option

By Bruce Reichstein

FHA 203(k) rehab loans include an option for smaller, less ambitious rehab projects. Borrowers who want a home loan to do rehab or repair work but don’t want to do a large project might assume FHA loan funds are not available, but this is not true thanks to the FHA Limited 203(k) Rehab Loan option. What Is The FHA Limited 203(k) Rehab Loan? HUD 4000.1, the FHA loan handbook, describes the FHA Limited 203(k) mortgage as being good for “minor remodeling and non-structural repairs”. The rules for this loan state that the total rehabilitation cost may not exceed $35,000. The good news? There is no minimum repair cost for this type of rehab loan. Ineligible Projects For FHA Limited 203(k) Mortgages HUD 4000.1 features a list of things 203(k) funds | more...

September 30, 2022

Why Choose An FHA Mortgage?

By Joe Wallace

You may have heard that the FHA loan program features a low minimum down payment, lower credit requirements, plus the ability to apply for extra loan funds to add energy-saving improvements to the home you are buying with an FHA loan. This is accomplished using a program called the FHA Energy Efficient Mortgage. FHA home loans, which are NOT for first-time home buyers only, are offered to all financially qualified applicants. These home loans, unlike some of their USDA counterparts, are not need-based and do not feature income restrictions. FHA mortgages are government-backed loans, which means there is an arrangement between the lender and the federal government that reduces the risk to the lender. This is why FHA lenders can offer you lower down payments and more competitive interest rates | more...

September 19, 2022

Which Is Better: Conventional Mortgages Or FHA Home Loans?

By Bruce Reichstein

Which is better, a conventional mortgage or an FHA home loan? If you are struggling to make this choice, rising interest rates and home ownership costs might make you look twice at your upfront costs and other expenses associated with each type of mortgage loan. The more forgiving credit requirements and down payment expectations of an FHA mortgage may have you thinking twice about going conventional. When it comes to FICO scores, FHA loans on paper are easier to be approved for than conventional home loans. And while a conventional mortgage could be more affordable over the lifetime of the mortgage, those who need more flexible credit requirements and lower upfront costs may find the FHA mortgage worth considering. There are a few objections to FHA loans. Some are less | more...

September 14, 2022

FHA Appraisal Rules For Systems In The Home

By Joe Wallace

In 2016, we published an article about FHA loan appraisal rules for certain systems in the home. FHA appraisals have rules governing the process including some that address specific systems in the home. Make no mistake: some FHA appraisal requirements depend on the local authority, while other requirements have specific guidance. Depending on the issue your experience may vary. As we noted in 2016, FHA appraisal rules are found in HUD 4000.1, which is the rule book for all FHA single-family mortgage loans, refinancing, and reverse mortgages. Where heating the home is concerned, FHA loan rules include the following: “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source.” The installed system must have | more...

August 29, 2022

Article Update: Using Rental Income To Qualify For An FHA Home Loan

By Joe Wallace

In 2017, we published an article about FHA loan rules and whether it is possible to qualify for an FHA mortgage using rental income. Back then we cited FHA loan rules and regulations that stated it IS possible, but only if certain conditions are met. Part of the issue? Whether or not the rental income meets FHA loan rules in HUD 4000.1, the FHA Single Family Lender’s Handbook. If your income is derived in whole or in part by rent payments, the lender will need documentation to support that. Back in 2017, we reported FHA loan rules in HUD 4000.1 addressing the rental income issue starting on page 202. That section begins, “Rental Income refers to income received or to be received from the subject Property or other real estate | more...

August 24, 2022

Article Update: FHA Loan Appraisal Rules For Central Heating and Air Conditioning Systems

By Bruce Reichstein

In 2017, we asked an important appraisal question. We asked, “What are the FHA loan appraisal rules for central heating and air conditioning systems? Does a house need to have central air/heating to be FHA approved?” There were two answers to this question back then and the same issues apply today. In HUD 4000.1, we learn the following about the appraisal requirements for heating systems and central air conditioning units, including the following requirement: “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source. FHA loan rules say the Appraiser must notify the Mortgagee of a deficiency if the permanently installed heating system does not: “Automatically heat the living areas of the house to | more...

August 22, 2022

Article Update: FHA Loan Rules For Different Income Types

By Joe Wallace

Back in 2017, we published an article examining the FHA loan rules for income. As we noted back then, not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That means a participating FHA lender must have rules that govern how/if certain types of income may be included for the purpose of determining a borrower’s monthly gross income. That information is needed to calculate the debt-to-income ratio your lender must have to help approve the loan. FHA Loan Rules For “Primary Employment” HUD 4000.1, the FHA Single-Family Lender’s Handbook, contains guidance for the lender to review hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” | more...