Articles in Category: FHA Loan Basics

March 20, 2018

Property Flipping And FHA Home Loan Rules

What do you need to know about property flipping and FHA home loan rules? The first thing to know is that flipping is addressed in the FHA loan handbook, HUD 4000.1 and there are measures in place to discourage the practice. That said, the rules which prevent flipping usually apply to the buyer’s side of the transaction. FHA loan rules don’t forbid a borrower from selling the home purchased with an FHA mortgage at any time. But the rules do have something to say about FHA mortgage approval for “flipped” homes. How FHA Defines Flipping Not all homes that are purchased and end up back in the housing market fairly quickly will meet the FHA definition of a flipped house. HUD 4000.1 defines flipping on page 145, stating: “Property Flipping | more...

FHA Mortgage Loans: Do Interest Rates Matter?

March 13, 2018

When Should I Refinance With An FHA Mortgage?

By Joe Wallace

When should I refinance with an FHA mortgage? That is a question many home owners face, especially if their financial plans have changed from the ones the borrower had when closing the original mortgage. Do you know if it is a good time to refinance? If you need lower payments or interest rates, and are credit-qualified to receive those lower rates, it may be the right time to explore your options. FHA Refinancing For Borrowers In Adjustable Rate Mortgages Some FHA borrowers buy a home with an adjustable rate loan, either thinking they will sell before the introductory rate ends (or before the rates are adjusted beyond a certain threshold) or refinance the loan at some later date. FHA ARM loan adjustments may be more conservative than some conventional loan | more...

March 8, 2018

FHA Loans, Eligible Property Types, And Mixed-Use Properties

By Joe Wallace

There are a few misconceptions about FHA loans when it comes to eligible property types and purchasing mixed-use property. The FHA Single Family Home Loan Handbook, HUD 4000.1, has some instructions for the lender in these areas that are good to know going into the house hunting process. FHA Loans For Mixed-Use Property There are FHA mortgages available to purchase mixed-use property as long as that property meets the right FHA criteria; it must be primarily residential in nature, and non-residential use of the home must not overwhelm the property. HUD 4000.1 defines “mixed use” property as follows: “Mixed Use refers to a Property suitable for a combination of uses including any of the following: commercial, residential, retail, office or parking space. Mixed Use one- to four-unit Single Family Properties | more...

March 1, 2018

FHA Appraisal Rules And Model Building Codes

By Bruce Reichstein

When it comes to FHA appraisal rules, it’s easy to forget that the appraisal requirements and minimum property standards set by the FHA are not the only regulations which must be followed. State law, and local building codes also apply. The FHA/HUD official site includes instructions to participating lenders and appraisers about model building codes and how FHA mortgage appraisal rules work together in the FHA loan transaction process. According to FHA.gov, “The Minimum Property Standards (MPS) establish certain minimum standards for buildings constructed under HUD housing programs. This includes new single family homes, multi-family housing and health care type facilities”. At one time there were a variety of minimum property standards for different types of properties. But since the era of the 1980s, the Department of Housing and Urban | more...

February 19, 2018

Happy Presidents’ Day 2018

By Bruce Reichstein

Happy Presidents’ Day 2018! Today banks and markets are closed, and we pause from our usual schedule of writing posts and answering questions about FHA home loans to observe the holiday. We return with our regular content schedule tomorrow. Thank you very much for reading!

January 4, 2018

What Do I Need To Know About Applying For An FHA Mortgage?

By Bruce Reichstein

What do I need to know about applying for an FHA mortgage? The answers to this question can help any potential home loan applicant go into the process better prepared and ready to begin the journey toward home ownership. Preparing For An FHA Mortgage Loan Takes Time The average preparation time for an FHA loan can be up to a year or more, depending on the borrower. Why does it take so long to plan for an FHA loan? Part of the prep time involves saving up for the fees and expenses of the loan including appraisals, compliance inspection fees, and the required minimum down payment. Borrowers should expect to pay a minimum of 3.5% of the adjusted value of the home as a down payment; this is required above | more...

January 4, 2018

What Can I Buy With An FHA Home Loan?

By Joe Wallace

What can I buy with an FHA home loan? There are many options available including town homes, condos, mobile homes, manufactured homes, and more. But there is also a list of things you cannot use an FHA mortgage loan to purchase, and that’s good to know going into your search for the right home for you. For example, FHA mortgages cannot be used to purchase any property you don’t intend to live in as your primary residence. FHA home loans are only for properties you will live in as your home address. FHA home loans can be used to purchase homes with a single living unit, but can be used to buy property with as many as four living units. That means that a borrower could potentially buy a four | more...

December 11, 2017

FHA Refinance Loan Options

By Bruce Reichstein

Are you considering your FHA refinance loan options in 2018? There are several different options to choose from depending on your financial needs and goals. What do you want to do with an FHA refinance loan? Lower Your Monthly Mortgage Payments There are FHA refinance loan options that can help lower your interest rate or monthly payments, depending on circumstances. Some borrowers with non-FHA loans want to refinance into an FHA mortgage because of potentially lower interest rates. This is often done with an FHA no-cash out refinance loan option. Whether you will get lower monthly payments on an FHA no-cash out loan depends on several factors including your credit scores, the current amount you are paying on a home loan, and whether you choose to finance certain expenses associated | more...

FHA One-Time Close Construction Mortgage Basics

November 22, 2017

How Do You Get A One-Time Close FHA Construction Loan?

By Bruce Reichstein

How do you get an FHA construction loan? If you want to have a new home built from the ground up (as opposed to buying an “existing construction” home that already exists), an FHA new construction loan is possible. The FHA One-Time Close / Single-Close construction loan makes it much easier with a single application and closing for the entire project. Other types of construction loans feature TWO closing dates and a more complex process. FHA One-Time Close mortgages simplify the construction loan by wrapping the entire loan process up with a single application and loan approval. Not all FHA lenders offer construction loans, so you’ll need to shop around to find the right lender for your needs. There are two basic types of FHA construction loans-a “traditional” construction loan, | more...

November 16, 2017

Do FHA Loan Requirements Change Each Year?

By Bruce Reichstein

Do FHA loan requirements change each year? This area can be a bit confusing because some aspects of the FHA loan program have changed in recent years, and some things are updated on a yearly basis. But the basic structure of the FHA loan program including FICO score minimums, appraisal rules, and occupancy requirements? These do not change from year to year. Do FHA Loan Rules Are In HUD 4000.1 Change Annually? HUD 4000.1 is the FHA Single Family Home Loan Handbook. It contains all the basic rules and requirements for FHA home loans. It lists the FICO score requirements, loan repayment history rules, debt-to-income ratio guidelines and other issues that affect FHA loan approval. These requirements do not change from year to year, but are subject to revision based | more...