Articles in Category: Special FHA Programs

November 20, 2018

One-Time Close FHA VA USDA Construction to Permanent Financing

There is a type of home loan borrowers can apply for when they want a house built for them from the ground up. These mortgages are known as One-Time Close loans and are offered by the VA, USDA, and FHA programs via a participating lender. Do you prefer to have a home built just for you rather than purchasing someone else’s property? What Are FHA Construction Loans? The FHA construction loan known as a One-Time Close (OTC) mortgage, like its’ USDA and VA counterparts, offers qualified borrowers a single mortgage for the construction project; traditionally home construction loans featured two applications, two closing dates, and two chances to have a loan application approved or denied. There is one loan for the construction itself (which must be paid for along with | more...

November 12, 2018

FHA One-Time Close Construction Mortgages For Dream Homes Part Two

By Bruce Reichstein

Why choose to build a home instead of buying an existing construction property with an FHA mortgage? Some borrowers simply don’t want the hassle of house hunting or can’t find the right existing property. In cases where an FHA borrower wants a home built for them, the FHA One-Time Close construction loan (OTC) can be a major help. In a previous blog post, we started discussing why borrowers should choose an FHA construction loan over a conventional one. There are plenty of reasons including these: Lower Down Payments As with interest rates, FICO scores and other credit qualifications will play an important role in the down payment requirement you are given with FHA OTC mortgages. In general borrowers should expect to make a minimum down payment of 3.5%, but borrowers | more...

November 12, 2018

Build Your Dream Home: FHA One-Time Close Construction Mortgages

By Joe Wallace

FHA One-Time Close construction loans, also known as construction-to-permanent mortgages, are a way that borrowers who need a lower down payment and more flexible loan approval guidelines can apply for a home loan that allows the property to be built from scratch. One-Time Close loans, which are sometimes referred to as FHA OTC mortgages, require the borrower to qualify only once for both the construction portion and the mortgage loan. This type of FHA mortgage may vary more among participating lenders because of certain features of the loan including the type of property that can be built, and the loan approval process as it relates to getting construction permits for the project. Some Options Are Available With Some Lenders But Not Others: Shop Around! Your participating lender may not offer | more...

October 15, 2018

HUD Announces Disaster Relief For Hurricane Michael Victims In Florida

By Bruce Reichstein

The Department of Housing and Urban Development has announced disaster relief for victims of Hurricane Michael in Florida. According to a HUD press release, the government will “speed federal disaster assistance to the State of Florida and provide support to homeowners and low-income renters forced from their homes due to Hurricane Michael” following a presidential declaration of a major disaster area in several Florida counties including Bay, Franklin, Gulf, Taylor, and Wakulla. The declaration means those living in the affected areas are eligible for a 90-day moratorium on foreclosure on FHA mortgages. To get the benefit of this moratorium borrowers should call their loan officers and contact the FHA Resource Center at 1-800-304-9320. Never assume it is safe to simply stop making payments on an FHA mortgage after a natural | more...

October 11, 2018

FHA Loan Rules For Presidentially-Declared Major Disaster Areas

By Bruce Reichstein

In September of 2018, the FHA and HUD issued a reminder to lenders and FHA loan servicers regarding official policy for dealing with loans in presidentially-declared major disaster areas. A document labelled FHA INFO #18-40 states that for both forward loans and FHA reverse mortgage loans, certain guidance applies once the federal disaster area declaration has been made. The guidance begins with a definition of the disaster area declaration, explaining that it is made when “natural or other events are of such severity that it is beyond the combined capabilities of state and local governments to respond”. When this is invoked by the president, FHA loan guidance to participating lenders includes the following: FHA Loan Foreclosure Moratorium FHA loan rules include a 90-day moratorium on foreclosures following the declaration of | more...

October 9, 2018

FHA One-Time Close Construction Loans

By Bruce Reichstein

Why should borrowers consider applying for an FHA One-Time Close (OTC) Construction Loan to build a home? There are several reasons why having a home built for you from the ground up rather than purchasing an existing construction property might be appealing. FHA One-Time Close mortgages are construction loans that have a single application and closing date; they require the use of escrow and the borrower can either purchase land to build on or use the land already owned. What are the motivations for using an FHA OTC? FHA One-Time Close Construction Loans have lower down payment guidelines, equity in the land owned could be used toward the FHA down payment requirement where applicable, and the borrower makes no mortgage payments during the construction phase of the loan. There are | more...

September 14, 2018

FHA Rehab Home Loans For Disaster Victims

By Bruce Reichstein

Those living in federally-declared major disaster areas may be eligible for an FHA home loan to replace or repair properties that have been damaged by the disaster such as a hurricane, floods, etc. FHA 203(h) rehab loans are designed specifically for this purpose-the 203(h) disaster loan features no down payment, an FHA FICO score requirement of 500 or higher, and the rehab loan can only be used for principal residences only. That means owner-occupiers only. How does the FHA 203(h) rehab loan work? HUD 4000.1 has the rules for this type of mortgage loan. The FHA 203(h) rehab loan is quite similar to the FHA 203(k) rehab loan which is available to any financially qualified borrower who meets FHA occupancy requirements for the home. FHA rehab loans allow funds to | more...

August 29, 2018

HUD Announces Updated Disaster Policy For Puerto Rico And Virgin Islands Home Owners

By Joe Wallace

In 2017, Hurricanes Irma and Maria devastated many U.S. territories; in the aftermath home owners in Puerto Rico and the Virgin Islands many people are still recovering from the disaster. In August 2018 the Federal Housing Administration (FHA) has announced updates to FHA foreclosure prevention options to allow borrowers with delinquent FHA home loans “easier access to bring their mortgages current without increasing their interest rates or monthly payments” according to HUD.gov. The Federal Housing Administration is also offering a final 30-day extension of its foreclosure moratorium for FHA-insured homeowners in Puerto Rico and the U.S. Virgin Islands. In February 2018, FHA introduced the Disaster Standalone Partial Claim option, intended to help borrowers in the affected disaster areas a way to catch up on pre-disaster mortgage payments without experiencing “payment | more...

May 28, 2018

Happy Memorial Day 2018!

By Bruce Reichstein

Happy Memorial Day! We pause today from our usual posts about FHA home loans, refinance loans, FHA One-Time Close construction loans and related topics to recognize the sacrifices made by our women and men in uniform. Thank you to all who have served-from those who have gone before to those who are about to enter their first year in uniform in service to our country. We return with our regularly scheduled posts on Tuesday. Thank you for reading, and have a safe and happy Memorial Day 2018. We are glad you stopped by!

May 25, 2018

FHA Home Loan Rules For New Construction Appraisals

By Joe Wallace

Borrowers who are interested in having a home built for them from the ground up using an FHA construction loan such as an FHA One-Time Close mortgage or any other type of FHA-guaranteed mortgage loan may wonder what the rules are for appraisals. After all, existing construction appraisal processes are for a home that is ready to sell (although the process may vary if the borrower is applying for certain types of rehab loans). While the appraisal requirements may be generally the same-the home must be safe, habitable, and have an economic life for the entire duration of the mortgage-there are procedural issues that affect new construction properties. With that in mind, appraisals on new construction run a bit differently in some procedural ways than existing construction mortgages; with the | more...