March 20, 2019
What home loan rules should you know ahead of your mortgage loan application? There are several that you should keep in mind when planning and applying for your new home loan.
FHA Loans Are Issued By Participating Lenders
A lender must meet FHA standards, conform to the FHA loan program rules, and generally be recognized by the FHA as being permitted to issue FHA-guaranteed mortgage loans.
But not all lenders choose to participate in the FHA home loan program so you may need to shop around for a lender. Shopping around is a good thing, but some feel that one lender is as good as another.
When it’s time to compare interest rates and mortgage loan terms, you may find that to be untrue.
But not all lenders choose to participate in the FHA home loan program so you may need to shop around for a lender. Shopping around is a good thing, but some feel that one lender is as good as another.
When it’s time to compare interest rates and mortgage loan terms, you may find that to be untrue.
FHA Home Loans Require Occupancy
You cannot use an FHA mortgage to buy a property you don’t intend to live in as your home address. You can have non-occupying co-borrowers on the mortgage loan with you, but at least one person obligated on the mortgage loan is required to live in the home as a condition of loan approval.
Your FHA Lender Will Check Your Credit Reports More Than Once
Don’t make the mistake of thinking you will only have your credit reviewed one time during the mortgage application process. This is not true. The same is true of other financial qualifications, too-your lender will review them multiple times before you purchase your real estate with an FHA mortgage.
FHA Loans Require A Down Payment, But It’s Low
Borrowers who qualify for the lowest down payment will only have to put 3.5% down and you may be able to find a local program that offers down payment assistance. Some of these programs are for first-time home buyers only, others only care that you are a resident of the state your down payment assistance may come from.
Your Payment Record Is As Important As Your FICO Score
It’s true-the on-time payment record you bring to the table for any kind of mortgage loan will be an important factor in loan approval.
Your Participating FHA Lender May Be Able To Work With You Even With Non-Traditional Credit
FHA loan rules provide specific instructions for participating lenders trying to qualify a borrower with thin credit, non-traditional credit, etc.
You will need to establish a paper and/or electronic record of payments for some form of financial obligation, and the lender may require more documentation than for a typical real estate purchase, but those with alternative credit histories and other issues may find help from a lender willing to offer an FHA mortgage loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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