Articles in Category: FHA Guidelines

July 18, 2018

Things To Ask About Buying Condos And Other Homes

If you are in the market for a condo that you want to buy with an FHA home loan, there are some important questions to ask before you commit. Some of these questions apply to any property type, but some more specifically apply for condo loans or FHA home loans for properties that come with a requirement to join a Homeowners Association (HOA) or agree to its’ rules. What should an FHA borrower ask a seller about a condo unit or a home governed by a condo association agreement or homeowner association agreement? First, ask if any applicable agreements include a Right of First Refusal, which requires the borrower to submit any sale or transfer of the home to the association for approval. FHA loans cannot be approved for properties | more...

July 17, 2018

FHA Home Loans And Your Credit Report: Know Your Rights

By Bruce Reichstein

When you look for advice about getting approved for an FHA home loan, you will find that many encourage potential borrowers for FHA new purchase home loans and FHA cash out refinancing are urged to request a free annual credit report. Free credit reports are your legal right and you are entitled to one free credit report per year from each of the three major credit reporting agencies. Those agencies are TransUnion, Equifax, and Experian. But in addition to the right to a free annual credit report, did you know you have other rights under federal law that apply to your credit reports? All consumers in the United States have the legal right under federal law to contest inaccurate or incomplete information in your credit reports. This right is discussed | more...

July 11, 2018

What You Need To Know About FHA Loan Applications And Loan Approval

By Joe Wallace

What should you know about FHA home loan applications and FHA loan approval? Before your home loan gets final approval from the underwriter, it will go through a series of processes including the credit check, appraisal, employment verification, and much more. But FHA home loan approval depends on more than one set of standards, which makes these check and approval processes more complex. To approve your loan, the lender must answer a variety of questions about the borrower’s ability to afford the loan. FHA Loan Approval Questions Your Lender Must Answer There are several areas the lender must have answers in to give you final loan approval: What is the borrower’s current or expected income? What kind of assets does the FHA loan applicant have? What is the FHA borrower’s | more...

July 6, 2018

Home Buying Tips For The First Time FHA Borrower

By Bruce Reichstein

Do you need house buying tips as a first time home buyer? If you are ready to stop using rental units and are interested in becoming a home owner, there are some very important steps to take before you apply for an FHA home loan. Consider Home Prices In Your Area: How Good Or Bad Is Your Real Estate Market? Are prices in your area reasonable? Within your budget? It’s a very good idea to become literate in the average prices for a home in your area so that you can tell if a seller is asking a reasonable price for the property you want to buy. It is just as important to know how much home you can afford. A two-bedroom property may be within your financial reach, but | more...

Are You Ready To Buy A Home With An FHA Mortgage?

June 13, 2018

FHA Home Loans With Non-Occupying Co-Borrowers

By Bruce Reichstein

Do FHA home loans have rules for transactions with non-occupying co-borrower? The short answer is yes, there are considerations for FHA mortgage loans that feature one or more borrowers who will occupy the property, but also a borrower who will not. These rules are found in HUD 4000.1 and include requirements for the basic transaction-at least one borrower MUST occupy the home to be purchased with an FHA mortgage as a condition of loan approval. This is normally supposed to happen within 60 days of loan closing according to FHA loan rules. Lender standards may also apply. FHA loan rules have some basic requirements for co-borrowers who will not occupy the home, including the following from HUD 4000.1: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take | more...

June 8, 2018

FHA Loan Rules: Can The Seller Provide Appliances As Part Of The Sale?

By Bruce Reichstein

FHA home loan rules in HUD 40001. state that a seller can make contributions as an incentive to a buyer considering the purchase of the seller’s property with an FHA mortgage. But those contributions are limited to six percent of the purchase price. Anything more constitutes something known as an inducement to purchase. The FHA loan rules don’t penalize the borrower or seller for this per se, but anything deemed an inducement to purchase will result in a dollar-for-dollar reduction in the loan amount based on the financial value of those inducements (which, again, are in excess of six percent of the purchase price.) All that said, FHA loan rules also exclude certain seller contributions from consideration under the six percent rule; the seller can freely add certain things without | more...

June 7, 2018

Reasons FHA Will Approve The Purchase Of A Second Home With An FHA Mortgage

By Joe Wallace

FHA loan rules in HUD 4000.1 require occupancy of the home as a condition of loan approval. This means that if you are buying, building, or refinancing a mortgage using a new FHA loan, at least one borrower obligated on the mortgage must live in the home as the main residence or home address. But there are some exceptions allowed in certain circumstances where a borrower can apply to buy another home with an FHA mortgage without selling the property originally purchased with an FHA guaranteed loan. What are these exceptions? Relocation To Another Area If a borrower’s job demands include a change of address, another FHA mortgage (without selling or paying off the first FHA loan) may be possible. This is permitted when the borrower is “relocating or has | more...

FHA Mortgage Loan Rule For Earnest Money Deposits

June 5, 2018

FHA Mortgage Loan Rules For Earnest Money Deposits

By Joe Wallace

When it’s time to get serious about a home you want to buy with an FHA mortgage loan, the payment of earnest money is an important step toward owning the property. FHA loan rules have specific requirements for earnest money deposits; like other payments associated with your home loan transaction, there are requirements for the payment and sourcing of these funds. The FHA Loan Handbook, HUD 4000.1, explains that the lender is required to verify and document the borrower’s earnest money deposit including the amount and the source when the earnest money exceeds one percent of the sales price or, as HUD 4000.1 explains, “is excessive based on the Borrower’s history of accumulating savings”. In such cases the lender must obtain: A copy of the borrower’s canceled earnest money check; | more...

May 30, 2018

FHA Home Loans For Manufactured Housing Classified As Condo Projects

By Bruce Reichstein

Are there really FHA home loans for manufactured housing classified as condo projects? Believe it or not, the FHA loan rules in HUD 4000.1 state that such loans are indeed available under the FHA mortgage program in addition to FHA One-Time Close construction loans, FHA Rehab loans, and other options. How does the FHA Loan Handbook describe these mortgages? “Manufactured Housing is a Structure that is transportable in one or more sections. It may be part of a Condominium Project, provided the project meets applicable FHA requirements.” FHA loans for manufactured housing, regardless of whether it is part of a condo project or not, must meet certain requirements including size, purpose, and how the home is delivered to the borrower. Specifically, manufactured housing eligible for FHA mortgage loans must be | more...

May 15, 2018

FHA Home Loans And Occupancy Requirements

By Bruce Reichstein

What are the occupancy requirements for FHA home loans? Like many government backed loans, there are general occupancy requirements a borrower must follow as a condition of loan approval. Whether you are buying an existing construction home or having one built for you using an FHA One Time Close construction loan, some guidelines for occupancy will apply. FHA Definition Of Occupancy, Principal Residences FHA loan occupancy rules basically require that the borrower live in the home full time, using it as the primary residence or principal residence instead of a vacation home, time share, or other intermittent occupancy arrangement. How does the FHA specifically define “principal residence”? According to HUD 4000.1: “A Principal Residence refers to a dwelling where the Borrower maintains or will maintain their permanent place of abode, | more...