Articles in Category: FHA Guidelines

July 18, 2024

FHA Home Loans: What Kind Of House Can I Buy or Build?

FHA loan rules in HUD 4000.1 include guidelines for lenders explaining what types of property are eligible, and what types are ineligible, for an FHA mortgage. You might not realize at first that an FHA mortgage can be used for properties other than typical suburban homes; FHA mortgages can be used to buy or build a typical family house, but also to purchase condo units, manufactured housing, and much more. Allowed Property Types For FHA Loans The list of property types you can choose from includes the previously mentioned types but also: You can buy existing construction, new construction that has never been occupied, or have a home built from scratch using an FHA One-Time Close construction loan. Some Property Types Aren’t Allowed What some don’t realize is that in | more...

May 30, 2024

Before You Reach Closing Day

By Joe Wallace

Once your home loan application is approved, is a borrower really home free on the way to closing day? Is the loan application a done deal once approved? Not quite, and that’s a factor some new borrowers should keep in mind at all times. Never assume the deal is done until the keys are in your hand. Why do we say this? There are important reasons which we explore below. Damage To The Property The house you want to buy with an FHA loan may be in great condition when you make an offer to the seller. But what happens if the house experiences a major disaster, fire, or even an accident? If your loan has not yet closed, you and the lender must determine whether the sale can happen. | more...

May 8, 2024

FHA Appraisal Rules Change To Help Borrowers

By Joe Wallace

The FHA and HUD have revised appraisal rules for FHA single-family loans. Among the changes, FHA lenders must now provide home buyers with “clarified guidelines to contest an appraisal or request a reconsideration of value (ROV.) “root out racial, ethnic, or national origin bias in residential property valuations” on homes purchased with FHA mortgages.” HUD Publishes Its New Appraisal Guidelines A HUD mortgagee letter published in May 2024 says there are important changes in HUD’s Nondiscrimination Policy, Appraiser Conduct, and other Federal Housing Administration (FHA) Roster Appraiser requirements. The goal is to create more equity in the appraisal process and “ensure appraisals for insured Mortgages are performed in a competent, independent, impartial, and objective manner” and that appraisers conform to what HUD calls the “Competency Rule.” Changes To FHA Appraisal | more...

May 2, 2024

Can You Lose Earnest Money With An FHA Mortgage?

By Joe Wallace

There are many different types of home loans, but most of them have one thing in common: the need to use home loan earnest money as a serious buyer. You don’t have to save or plan for earnest money when you are preparing for a home loan, but it is a bad idea not to, as we examine below. Earnest Money Defined Fannie Mae has an article on its official site discussing the nature of earnest money. That discussion includes the following: “Buyers demonstrate their commitment to purchasing a home by submitting an earnest money deposit. This money is held temporarily in an escrow account along with their offer.” NerdWallet.com also rings in, saying “Earnest money is a good-faith deposit you make on a home to show the seller you’re | more...

May 1, 2024

What To Know About FHA Loan Application Documents

By Bruce Reichstein

There is documentation required to process your home loan application and knowing what you need to submit in advance will speed up your home loan application journey. Do you know what your home loan or refinance loan transaction requires of you? The lender requires tax documents, information about the sources of your down payment, access to your credit reports, and more. But there are rules about who provides these documents, and you’ll need to be aware of them when gathering your paperwork. FHA Loan Rules On Documentation Some of the information your lender needs comes from you personally. This includes your photo identification and proof of legal residence in the USA (which may be required where applicable). FHA loan rules say you do not have to be a citizen to | more...

April 30, 2024

FHA Home Loan Facts To Know Before You Buy

By Joe Wallace

Many articles discuss what you can and cannot do with an FHA mortgage, such as the types of homes you can buy or whether or not you can earn money from a house you purchase with an FHA loan. But there are other issues you should know in the don’t department. For example, did you know you can finance certain closing costs, including the FHA upfront mortgage insurance premium? However, rules govern that portion of the transaction. The big takeaway from those rules is that you can’t finance a portion of that up-front mortgage insurance premium. FHA loan rules (not the lender’s requirements) state that a borrower pays the loan in full or finances it in full at closing time. There are other similar issues to know when you are | more...

April 17, 2024

Questions To Answer Before You Start Househunting

By Joe Wallace

Making assumptions about the home loan process can hurt you. For example, some borrowers believe the FHA loan program is wrong for them because they aren’t financially disadvantaged. That assumption is not true. Others wrongly believe it is impossible to qualify for an FHA loan because they have less-than-perfect credit. This is sometimes true depending on the circumstances but if your FICO scores are above 500, this type of mortgage is worth considering. Additional lender standards may apply but the FHA loan program offers more forgiving credit requirements than some conventional equivalents. Any Residence Can Be Purchased With An FHA Mortgage? FHA single-family home loans are not permitted for investment properties. That said, it’s possible to use an FHA mortgage to buy a one-to-four-unit property but the borrower must live | more...

April 15, 2024

FHA Loans and Home Inspections

By Bruce Reichstein

The difference between an FHA appraisal and a home inspection is a serious issue. Borrowers applying for an FHA mortgage to buy a home must have an FHA appraisal to ensure that the property meets minimum standards. But when a home passes the appraisal process or allows the loan to go through as long as required corrections are made, does that mean the property has been inspected and approved by the FHA? Not according to the FHA official site, which says an appraisal is never a guarantee or endorsement of any kind. Borrowers should know that the purpose of the appraisal is to establish the home’s fair market value and ensure that the home meets the minimum standards. However, the appraisal is not intended to discover any/all issues with a | more...

April 9, 2024

Will FHA Loan Policies Change After The NAR Settlement?

By Joe Wallace

It was a legal move that stunned the mortgage industry. The National Association of Realtors (NAR) agreed “to pay $418 million over roughly four years to resolve all claims against the group by home sellers related to broker commissions,” according to a CBS News report. The settlement also affects how much in real estate commissions may be paid by the seller. The old 6% requirement has been eliminated. Federal agencies, including the FHA and HUD, are now working to assure customers and clients that the news won’t upend certain aspects of the FHA loan process. The Settlement Thanks to the proposed settlement, sellers may potentially pocket the savings they get by not having to pay the old traditional 6% MLS listing fee. Could those savings encourage some home sellers to | more...

February 21, 2024

Who Needs Homeowner Insurance?

By Joe Wallace

FHA loans, VA mortgages, and similar government-backed home loans don’t force the borrower to select specific types of homeowner insurance to protect your investment but that does not mean it’s not necessary. Mortgage insurance protects the lender. If the borrower defaults on the FHA home loan, mortgage insurance minimizes the loss for the bank. Home insurance, on the other hand, is a tool for the borrower. It protects your investment by insuring your home and its contents depending on the wording of your specific policy. First And Foremost Paying for both insurance types may make you feel there is protection for all circumstances. But not all types of damage are covered by your insurer. Did you know that flood insurance is completely separate from insurance for water damage? Some borrowers | more...