Articles in Category: FHA Guidelines

May 17, 2019

FHA Loan Appraisal Questions: Why Is Peeling Paint A Problem?

One common question about FHA appraisals involves the issue of peeling paint. This can be a problem for some homes, especially those built on or before the year 1978. Borrowers want to know why the appraiser reviewed the home (the appraisal is not a property inspection) and required a correction of a peeling paint issue as a condition of loan approval. The borrower’s question in these cases is normally a variation on, “It’s just a cosmetic issue, why is the appraiser making a big deal out of peeling paint?” Unfortunately, for homes (including condo units) built on or before 1978, peeling paint is not just a cosmetic problem due to the use of lead paint in those construction projects before it was recognized as a safety hazard. FHA home loan | more...

May 15, 2019

Things That Keep You From Getting An FHA Mortgage

By Joe Wallace

What keeps some borrowers from getting an FHA home loan or refinance loan? In some cases the answers are easy, in others they are more complicated. Learn what some of the red flags are for lenders and prepare yourself to get the FHA home loan you need. Automatic Denial Of FHA Home Loans: When Does It Happen? FHA home loans are automatically denied for a variety of reasons. Borrowers with FICO scores lower than 500 are automatically denied, as are borrowers who have applied for a mortgage while they are in a bankruptcy that has not been discharged yet. U.S. citizenship is not required for an FHA home loan, but those who apply without legal standing of some kind (anyone in the country illegally) is automatically turned down for the | more...

April 30, 2019

What You Need To Know About FHA Home Loan Interest Rates

By Bruce Reichstein

What does a new borrower need to know about home loan interest rates? There are many home loan blogs that discuss the fluctuations of mortgage rates and talk about those moves higher and lower. Some discuss the rates as though the ones mentioned could be offered to all applicants. Why isn’t this true? The rates you see advertised on the internet are usually posted as “best execution” interest rates which means that “ideal conditions” are assumed. What are those ideal conditions? An incredibly well-qualified borrower with high FICO scores, low debt ratios, and no credit issues. That means that the actual interest rate you are offered will vary from what you see posted online, and that the rate will depend on your FICO scores and other financial qualifications. But what | more...

April 29, 2019

Can I Use An FHA Loan To Buy A Single Family Rental Home?

By Joe Wallace

Some FHA borrowers want to purchase a first home, while others are looking for real estate they can purchase in addition to an existing property. But still others are wondering if they can use an FHA mortgage loan to become a landlord by purchasing real estate they intend to rent out to others. Does the FHA home loan program allow a borrower to apply for a mortgage loan to buy a home intended as a rental? The short answer is that it depends greatly on two factors-the size of the home and whether the borrower intends to live in that property full-time. Borrowers applying for FHA mortgages are allowed to purchase real estate with one to four units. The borrower is free to rent out the unused units in the | more...

April 28, 2019

HUD Announces Changes To Down Payment Assistance Rules

By Bruce Reichstein

The Department of Housing and Urban Development and the FHA have issued a Mortgagee Letter announcing changes to the rules for down payment assistance. FHA loan program rules permit the borrower to get assistance with the minimum required down payment-this assistance can come in the form of gift funds from family or friends, money from employers, or even down payment assistance programs. Government entities are permitted to provide such down payment help, too. In all cases, the down payment assistance must meet FHA loan requirements. Gifts cannot be loans in disguise; there must be no expectation of repayment of a gift of down payment funds. And now, thanks to revisions to the rules governing these issues in HUD 4000.1, government entities must meet certain requirements when providing down payment funds. | more...

April 5, 2019

FHA Loan Facts

By Bruce Reichstein

When you start doing research on home loans and want to learn what it takes to qualify for an FHA mortgage loan as either a first-time home buyer or as a return borrower, you will find websites with lists of loan approval requirements. Some of those FHA home loan approval requirement lists look like this: A credit score of 580 or higher for the lowest down payment A debt-to-income ratio of 43% or less 3.5% down payment 1-2 years of consistent employment history A property that meets FHA standards OR A home eligible for FHA 203k rehab loan financing You may find a caveat on lists like these stating that they are “general guidelines” and that is true. What isn’t always included in those caveats is that additional lender standards | more...

April 3, 2019

FHA Home Loan Appraisal Issues

By Bruce Reichstein

We are contacted frequently with questions related to FHA appraisals. Many first-time borrowers and experienced house hunters alike have trouble understanding the nature of the appraisal process and how it works. We are often asked if a certain appraisal condition is grounds for having the loan denied, and whether FHA home loan appraisal rules fit a unique circumstance. But whatever the question, the variable in the equation is the fact that FHA appraisal rules, which are basically minimum requirements, are not the only rules that will affect the transaction. So even if FHA appraisal requirements say that a home that has lead-based paint may be acceptable under certain conditions, state or local building code may have additional requirements. And the building code requirement in that area would have to be | more...

March 29, 2019

Five Things You Should Do Before Applying For Your First Home Loan

By Joe Wallace

First-time home buyers should be working on five areas before they apply for a mortgage loan. Are you working with a real estate agent or searching the real estate listings in your local area? Maybe you want to buy a new home in a different area than where you are living now and need to know the ins and outs of the neighborhoods there? Decide What Kind Of Home Loan You Need Having a home built from the ground up is possible with an FHA One-Time Close Construction Loan, but these loans are quite different than an FHA Condo Loan or FHA loans for a mobile home or manufactured home. Knowing the kind of loan you want in advance will help you search for the right kind of lender-some financial | more...

HUD Announces Settlement In Maine Housing Discrimination Case

March 28, 2019

FHA And HUD Announce Home Loan Policy Changes

By Joe Wallace

The Department of Housing and Urban Development has announced policy updates and changes that have been added to the FHA Single Family Home Loan Program Handbook, HUD 4000.1. According to an FHA/HUD press release, these are the first changes and updates to the handbook since late 2016. “With today’s update, FHA is recommitting to the industry that it will continue to maintain and enhance the SF Handbook so that it becomes a single, comprehensive source of policy guidance for lenders and other stakeholders doing single family business with FHA” according to the press release. The updates, posted March 27, 2019, include a set of “technical changes for consistency and clarity” as well as FHA home loan program policy updates. These updates affect how the lender may handle certain issues associated | more...

March 25, 2019

House Hunting Advice For First-Time Home Buyers

By Joe Wallace

When you start making plans to work with a realtor, there are some very good things to consider ahead of time. Checklists, online mortgage calculators, and other home buying tools are only some of the things you’ll want in your house hunting toolkit when you are ready to become a home owner. Decide What Your Priorities Are For Your New Home Before you ever fill out FHA home loan paperwork, and long before you decide which real estate agent to work with, you should have an idea of what your main priorities are for your new home. Do you need a home located near a certain school or type of school? Are you looking for some place quiet and residential and nowhere near a shopping mall, gas station, or movie | more...