Articles in Category: FHA Requirements

June 4, 2024

What To Consider As You Plan Your FHA Mortgage

Are you a new borrower with questions about how the FHA loan process works? There are important details to learn and remember to get along the way to get the most out of your FHA mortgage. Borrowing Limits For FHA Mortgages For FHA loans, HUD 4000.1 says 31% is the highest number for typical FHA mortgages without an Energy Efficient Mortgage add-on. Those loans can technically go higher. FHA loan amounts are typically guided by the appraised value of the home and the FHA loan limit for your area, among other factors. It’s possible to be approved for an FHA loan for up to 96.5% of the home’s sale price. That means your downpayment is 3.5%, which is comparatively low. But should you pay only the minimum? Borrowers interested in | more...

June 3, 2024

FHA Home Loan Credit Score Requirements: FICO Scores And More

By Joe Wallace

Many borrowers worry about their credit scores ahead of an application for an FHA home loan, and it’s hard for some to gauge whether they have sufficient credit to get a loan approved. FHA loans have more forgiving credit requirements, and borrowers should not assume they do not qualify for a home loan without discussing their circumstances with a participating lender. When is a low credit score too low? FHA home loan rules specify that the lender must ensure a 500 FICO score (the very minimum) to qualify for an FHA mortgage, but your credit score numbers don’t tell the whole story. Lender Requirements For Home Loan Approval Vary You may read that FHA loan rule minimums for FICO scores do not always reflect the participating lender’s credit score requirements–this | 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 29, 2024

How To Avoid Confusion When Buying Your First Home

By Joe Wallace

Many first-time house hunters are confused by mortgage loan industry jargon, real estate acronyms, and industry terms used incorrectly. How do you separate the facts from the fiction when learning new terms along the way to closing day? There are many issues. Calling an appraisal an “inspection” is one good example (see below.) There are also industry terms that sound familiar but don’t mean what some think they mean. The whole concept of mortgage insurance is a great example (see below). We examine some of the most common of these below. Owner-Occupied Homes Are Not Investment Properties An FHA purchase or refinance loan is meant for owner-occupiers. These are the buyers who want the FHA loan to be used for the property they intend to live in. An FHA purchase | more...

May 21, 2024

Five Tips About FHA Mortgage Loan Interest Rates

By Joe Wallace

FHA mortgages feature lower interest rates than conventional mortgages thanks to being backed by the U.S. government. And while mortgage rates in 2024 are higher than in years past, FHA borrowers may still qualify for a rate that’s lower than some conventional equivalents. Those who qualify for the lowest down payment save money over the lifetime of their mortgages thanks to the lower rates, but how do you qualify for the lowest rate possible for your specific purchase? Here are some important tips about mortgage loan interest rates you should know in the planning stages of your new home loan. Credit Scores And Interest Rates Are Connected That statement does not pertain to the overall interest rate offered to all borrowers. Your lender will offer you a mortgage loan rate | more...

May 15, 2024

Buying A Home? Ask The Seller These Questions

By Joe Wallace

Are you looking for a home to buy with an FHA loan? It’s good to create a list of questions to ask the seller. Making the most informed decision you can on a specific house is important, and in addition to what you learn by asking about natural disasters in the area, property taxes, and the age of the roof, the way the seller responds to your question can be just as important as the answer you get. Asking Questions You should definitely do your own research on the local area to learn whether floods, tornadoes, hurricanes, or other natural disasters are a problem. But don’t miss the chance to ask the seller, even if you already know the answers. Ask the seller, “Has the home itself experienced a disaster, | more...

May 14, 2024

Why Get Pre-Approved For An FHA Home Loan?

By Bruce Reichstein

Why get pre-approved for an FHA mortgage? This is a question some first-time home buyers ask, and the answers can make a big difference in how you approach your home loan. FHA Home Loan Pre-Approval Does Not Commit You To A Mortgage When you fill out the forms to be pre-approved for a home loan, you are not committing to the transaction in the sense that you would be financially obligated to buy. The borrower is not legally committed to a purchase when getting pre-approved. Home loan pre-approval actually helps you be taken seriously as a buyer when you do find a home you’re ready to commit to. The buyer takes a pre-approved borrower more seriously and you may find that a pre-approval letter (depending on the housing market) is | more...

May 13, 2024

FHA Appraisal Guidelines You Should Know

By Joe Wallace

The FHA and HUD have reformed parts of the FHA single-family home loan appraisal guidelines found in HUD 4000.1. These changes are meant to improve the process for reconsidering an FHA appraisal in cases where there may be defects or violations of FHA policy. Can I Get A Revised FHA Appraisal? Was your FHA appraisal is flawed? In such cases the borrower or lender may be allowed to request a Recosideration of Value (ROV). An ROV is essentially a review of the appraisal to correct report deficiencies or problems with HUD regulatory compliance. You should not expect to be allowed a second appraisal only because the value comes in lower than anticipated. What HUD Says About ROVs The HUD official site says, “A Reconsideration of Value (ROV) refers to a | more...

May 9, 2024

When You Are Ready To Apply For Your FHA Mortgage

By Joe Wallace

When a borrower has the down payment funds and feels ready to commit to the house-hunting journey, applying to be pre-approved or pre-qualified for an FHA mortgage is the next logical step. But there are a few things to review before you begin. Gather Your Documents And Know Your Financials Applying for a loan includes bringing financial data to the bargaining table. You must gather two years of tax returns, you should know specifics about annual gross and net income, and be ready to give the lender information about outgoing debt, your current credit scores, and any other non-employment sources of income you want counted for loan approval purposes. Your lender requires this information to begin. Some situations require more information than others. For example, small business owners may be | 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...