Articles in Category: Loan Limits

October 6, 2015

FHA Loans, FICO Scores, and First-Time Home Buyers

A reader asked us a question about FHA loan FICO score requirements in the comments section recently, saying, “Im a first time home buyer and my credit score is 599 to 620 avg. from all 3 bureaus. All my credit cards are paid on time never been late. I dont have any negative accounts on my credit report. Do I have a chance of being approved?” There are two important issues to address with this reader’s question. The first is the reader’s status as a first-time home buyer. The FHA loan program itself does not provide any special status, preference, or benefits for first-time home buyers. That’s not to say that your chosen lender, won’t, or that there is not a state or local assistance program for first-time home buyers. | more...

What if my home was damaged in a natural disaster?

September 15, 2015

FHA 203(k) Rehab Loans

By Joe Wallace

Not all borrowers want to get an FHA home loan for a home that is perfect and fully ready to occupy. Some are interested in fixer-upper properties, and we commonly receive reader questions in our comments section about them. Here’s a good example of a recent query: “… If I was interested in purchasing a property below market value and having a contractor repair the existing home on the property is there a loan that could potentially work in this situation?” The FHA/HUD official site has a page of information about the FHA 203(k) rehab loan that addresses this issue directly. According to the FHA official site: “Section 203(k) fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to | more...

August 20, 2015

FHA Loan FICO Score Requirements: Your Mileage May Vary

By Joe Wallace

One of the most common questions about FHA home loans centers around FICO scores. Many borrowers wonder why their FICO scores may or may not be good enough to get FHA loan approval. FHA loan rules have minimum FICO scores defined in HUD 4155.1, but the confusion comes when a borrower who knows these minimums gets told their scores aren’t high enough for maximum financing or loan approval, depending on circumstances. The reason for this is simple: FHA loan minimums aren’t necessarily the lender’s minimum standards for FICO scores. The lender is free to require higher FICO minimums as long as that requirement is enforced in compliance with federal law. The minimum FHA FICO score requirement of 580 or better for maximum financing isn’t always what the lender will require–your | more...

When Is An FHA Loan Better Than A Conventional Loan?

August 11, 2015

FHA Loans And More Situations That Affect Loan-To-Value: Building On Own Land

By Joe Wallace

We’ve been discussing factors that can require an FHA borrower to make a large payment. Such factors can include loans where there is a non-occupying co-borrower, loans where there is an “identity of interest”, and situations where a parent is both the seller and the co-borrower on an FHA single family home loan. What other factors can require a larger down payment on your FHA home loan? In certain instances where an FHA borrower is building a home on his/her own land, the down payment requirement may change depending on specific details of the loan. HUD 4155.1 Chapter Two Section B states of these transactions: “A borrower is eligible for maximum financing if he/she acts as a licensed general contractor and is building a home on land that he/she already | more...

What you should know about FHA 203(h) Loans For Disaster Victims

August 10, 2015

FHA Loan Maximum LTV Amounts

By Bruce Reichstein

In our last blog post we discussed some of the basics about FHA loans, loan-to-value limits, and how certain circumstances might affect the maximum LTV on an FHA mortgage. Normally FHA single-family home loans for new purchases have a maximum LTV of 96.5%, requiring the borrower to make a 3.5% down payment. But FHA loans can have different LTV percentages if certain conditions apply. Homes that are purchased with non-occupying co-borrowers, for example, may require a higher down payment. According to HUD 4155.1 Chapter Two Section B, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence. When there are two or more borrowers, but one or more will not occupy the property as his/her | more...

July 17, 2015

House Hunting And Your FHA Home Loan

By Joe Wallace

There are many things you can do before and during your house hunting process to make buying your new home much easier. Do you know what home buyer resources are available in your state? Have you compared lenders both online and at the branch? Are you considering FHA loan pre-approval? Getting pre-approved is a very good step. It helps you establish a relationship with a participating FHA lender, and gives you a much better idea of what kind of price range and other factors you might need to consider when house hunting. Pre-approval forms will ask you those difficult questions–“How much do you want to spend on your home?” and “What size home do you need?” The pre approval question also forces many borrowers to think about their house needs | more...

June 27, 2015

FHA Loans Post-Bankruptcy? When To Apply?

By Joe Wallace

Borrowers who have filed for bankruptcy, or who have had other financial difficulties resulting in negative credit, may have questions about the timing of their next home loan application. We get many reader questions about this–some ask “When can I apply for a new loan?” or, “How long should I wait until I apply?” Others want to know if their credit scores are good enough, writing that they have scores within a certain range and whether those scores are enough to qualify. Bankruptcy, foreclosure, and other negative-credit actions may require specific waiting periods before you can apply again. Some of these are dependent on circumstances, lender standards and other factors–there often is no one set answer for borrowers who meet certain parameters. If you have these types of questions, one | more...

June 3, 2015

Initial Steps to Your FHA Home Loan

By Joe Wallace

There are many steps to purchasing a home with an FHA mortgage loan. House hunters don’t normally begin this process by picking up the real estate listings or exploring them online; house hunting is a process that should begin at least a year in advance of buying the home with an FHA loan with financial planning. Getting Your Finances Ready For An FHA Loan Preparing for your loan application a year in advance is strongly recommended. You’ll need to check your credit scores and make sure you bring a minimum of 12 months worth of on-time payments on all your financial obligations to the application process. Doing anything less can hurt your chances for loan approval. It’s important to remember that your lender will check the amount of debt against | more...

May 15, 2015

FHA Loan Rules For Employment: A Reader Question

By Joe Wallace

A reader asks, “if one party has a temp position to perm and there is a letter from temp staff stating that she will be hired full time at the end of the 6 month probation period by the company she is working for can we be eligible for a fha loan or will it get denied?” FHA loan rules for verifying employment and income from that employment are found in HUD 4155.1 Chapter Four, Section D, which states in part: “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrowers employment for the most recent two full years, and the borrower must: –explain any gaps in employment | more...

May 14, 2015

FHA Loans: Is There A Minimum Loan Amount?

By Joe Wallace

A reader asks, “Is there a minimum amount that you can get a loan for meaning (how cheap of a house will they loan on?) under 40K?” FHA loan rules in HUD 4155.1 do spell out an FHA loan limit, which is known as the “floor” on the bottom end, and the “ceiling” at the top end of the range. The FHA recently issued a mortgagee letter (HUDNo.2015-25) which updates the information for FHA loan limits in general and announces a new FHA loan rulebook to be issued soon, titled FHA Single Family Housing Policy Handbook 4000.1. The mortgagee letter states: “The minimum FHA national loan limit ‘floor’ is at 65 percent of the national conforming loan limit (which is $417,000 for a one unit property for the period January | more...