September 20, 2018

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Articles in Category: FHA Requirements

What You Need To Know About FHA Loans And Income Verification

What You Need To Know About FHA Loans And Income Verification

What do borrowers need to know about FHA home loans and income verification requirements? The short answer is that it depends on several factors including the nature of the borrower’s job. Why is this true? Why isn’t there a standard answer? Because there are a variety of different employment types and FHA loan rules must address them. Self-employed borrowers are held to a different set of requirements because verifying that income requires a different set of procedures than for “traditional” employment. Those who work in the gig economy as contractors, 1099 workers, etc. are also in a different set of circumstances than a typical 9-5 worker, so those employees need their own procedures, too. FHA Loan Income Verification Rules For more traditional employment, the lender may require pay stubs, tax | more...

 
How Do Student Loans Affect My FHA Mortgage?

How Do Student Loans Affect My FHA Mortgage?

How do student loans affect your FHA mortgage? Is it harder to get FHA loan approval if you have student loan debt? What if the debt is not currently due or being paid in monthly installments? FHA loan rules in HUD 4000.1 (the FHA loan handbook) address these issues. Student loan debt is in a category of its’ own thanks to rule changes a few years ago taking student loans into account during the review for credit worthiness. Student loans once upon a time were in a category called “deferred obligations” because it was possible to have a student loan debt and not be required to pay at that moment; the amount of the deferred obligation was taken into account in a certain way by the lender. But after the | more...

 
FHA Loan Rules And Investment Properties

FHA Loan Rules And Investment Properties

FHA home loans are generally intended for owner/occupiers; there is an occupancy requirement for the FHA single-family home loan program that basically allows loans for principal residences and denies loans for those who do not intend to occupy the home within 60 days of loan closing (unless other arrangements are made for a delayed move-in which may or may not be possible depending on the lender). HUD 4000.1 has the rules that govern occupancy and the purchase of homes considered to be investment properties. HUD 4000.1 begins by defining what it considers an investment property to be: “An Investment Property refers to a Property that is not occupied by the Borrower as a Principal or Secondary Residence.” That is fairly simple, and the rules in this section go on to | more...

 
FHA Home Loan Rules For Sellers

FHA Home Loan Rules For Sellers

Much of our discussion here about FHA home loans is focused on the buyer; what the FHA borrower can and cannot do with an FHA mortgage or refinance loan, how occupancy rules may dictate whether a home loan is approved or not, etc. But there are some FHA mortgage loan rules that affect the seller, too. Not all the FHA loan guidelines concentrate on the lender or borrower. For example, the seller is allowed to contribute a certain amount of money toward the costs of the home loan, but those contributions cannot exceed FHA and lender limits. If the seller’s contribution DOES exceed the limit, the borrower’s loan must be reduced dollar-for-dollar for the full amount above the FHA limit. There is a list of things that can result in | more...

 
FHA Home Loans With Less Than Two Years Of Employment

FHA Home Loans With Less Than Two Years Of Employment

Are you looking for a home but don’t have an extensive employment history? The general rule for home loan approval is that the lender wants to see two years of work history. Depending on the nature of the loan and other factors, the two-year rule may have certain additional requirements that apply, and the lender may not be required to personally verify previous employment if tax records or pay stubs can reflect a two year employment record. In general, conventional loans require two years of work or education related to income, VA mortgage loans have a similar two year requirement. USDA loans also require the borrower to prove two years of work history. What are the specific requirements for FHA mortgages? According to HUD 4000.1, “For all Employment related Income, | more...

 
Five FHA Home Loan Questions To Ask Your Lender

Five FHA Home Loan Questions To Ask Your Lender

There are some important questions to ask a prospective lender when you are shopping around for a home loan. Make the most informed choice you can about selecting your lender, and remember that it pays to shop around for an FHA mortgage! #5: Will You Provide Me With An FHA Loan Estimate? The Consumer Financial Protection Bureau (CFPB.gov) advises borrowers that lenders are required to provide a loan estimate within three days of application. CFPB says the estimate should include the following: estimated interest rate monthly payment taxes and insurance total closing costs for the loan The estimate should also include how the interest rate and payments may change where applicable. Lenders should be willing to provide this estimate. #4: Are The Terms Of This FHA Loan Subject To Change? | more...

 
FHA Mortgage Refinance Checklist

FHA Mortgage Refinance Checklist

If you are exploring your refinance loan options, FHA refi loans can help with cash out refinancing, rate-and-term refi, or even a refinance loan that lets you rehab or remodel your property. If you want a refinance loan, it’s a very good idea to assemble a checklist in the planning stages so you know where you need to focus to prepare for the new loan. There is more than one area to make checklists for including areas like your credit, your home ownership goals, and the plans you have for your refi loan. FHA Refinance Loan Checklists: Goals And Financial Plans A good checklist includes the reasons for your checklist items in the first place. Ask yourself why you want to refinance your mortgage-make a list of pros and cons | more...

 
FHA Home Loans, Appraisals, And Home Inspections

FHA Home Loans, Appraisals, And Home Inspections

FHA home loans require an appraisal in order to insure the property meets minimum FHA requirements. The appraisal also helps the lender set the loan amount based on the adjusted value of the home. Some borrowers are tempted to skip the optional home inspection process and simply go with the FHA appraisal. This is a bad idea because doing so basically results in buying a home and making a large investment without knowing the true nature of the property’s condition. There are some questions you can ask yourself to help better understand why a home inspection is needed; learning the answers to these questions can definitely change your mind about the temptation to skip a home inspection. How Does The Buyer Know If There Is A Roof Problem? Can you | more...

 
What You Need To Know About FHA Loans And Income Verification

Credit Mistakes People Make Before Applying For Home Loans

There are some common credit mistakes home loan applicants make before filling out loan application paperwork that can hurt them later when it comes time for the lender to decide whether to approve the mortgage loan. Avoiding these mistakes can go a long way toward loan approval. If you are applying for an FHA mortgage in the next year, consider these issues carefully! FHA Home Loans Have A Down Payment Requirement: Start Preparing Early Your FICO scores will help determine whether you are eligible for maximum FHA loan financing and the lowest down payment. If you do not work on improving your credit scores over the course of the year leading up to your FHA loan application, you may find yourself unable to get the most advantageous rates and terms. | more...

 
Why Do People Choose FHA Mortgages Instead Of USDA Home Loans?

Why Do People Choose FHA Mortgages Instead Of USDA Home Loans?

Why do some borrowers choose FHA home loans instead of the no-money-down USDA home loan? There are several reasons why an FHA mortgage might be the better choice depending on circumstances. USDA Mortgages Versus FHA Home Loans: Down Payment Requirements USDA loans do offer an advantage to eligible borrowers with a zero down payment requirement. USDA loan rules state that in some cases, borrowers who have assets higher than the USDA limit “…may be required to use a portion of those assets”. FHA home loans require a minimum down payment of 3.5% of the adjusted value of the home. The down payment requirement may be higher if there are other factors to consider including a non-occupying co-borrower (depending on circumstances), FICO scores that are lower than the limit for maximum | more...