April 1, 2015
If you are thinking about applying for an FHA mortgage instead of a conventional home loan, there are aspects of the FHA loan program you should know about before starting the house hunting process that will save you time. Knowing what types of homes you can purchase with an FHA loan, for example, will help you focus your efforts.
FHA loan rules published in HUD 4155.2, the Lender’s Guide To The Single Family Mortgage Process, states:
“FHA’s single family programs are limited to one- to four-family properties that are owner-occupied principal residences. FHA insures mortgages secured by
• detached or semi-detached dwellings
• manufactured housing
• townhouses or row houses, or
• individual units within FHA-approved condominium projects.”
The FHA will not approve or guaranty mortgage loans that are secured by the following types of property:
• commercial enterprises
• boarding houses
• hotels and motels
• tourist houses
• private clubs
• bed and breakfast establishments, or
• fraternity and sorority houses.”
As you can see, there’s a strict emphasis on residences. Borrowers who want to purchase manufactured housing or mobile homes should know that such homes will, as a condition of loan approval, need to be affixed to a permanent foundation.
For borrowers looking at condominium units, it’s important to remember that units in a condo project can be purchased with an FHA mortgage if the condo project is on the FHA approved list or added to it. You would need to speak to your lender about how the FHA approval process works for a condo.
FHA loans work in much the same way as conventional home loans do when it comes to your credit application, credit check, etc. A borrower is required to furnish the same type of tax, employment, and residence history. FHA home loan applicants must have a valid Social Security number.
FHA mortgage loans permit co-borrowers including non-occupying co-borrowers, though the amount of the loan transaction may be affected in some cases depending on the nature of the arrangement, whether the co-borrowers are related, etc. All borrowers who are financially obligated on the FHA loan must pass the same credit standards, meet FICO score requirements, etc.
Speak to a lender about these issues if you need further clarification, or ask us a question in our comments section. All comments and questions are held for review and may not appear right away on the site.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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