November 11, 2019

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Articles Tagged With: Down Payment

FHA Home Loan Down Payment Rules

FHA Loan Down Payment Rules

Do you know what the rules are for down payments according to the FHA Lender’s Handbook? HUD 4000.1 states that the minimum required down payment allowed for FHA mortgages is 3.5% of the adjusted value of the home. The borrower must pay this independently of any other closing costs associated with the loan. The seller, lender, or any other party with a stake in the outcome of the transaction cannot provide down payment funds to the borrower. Sellers are permitted to contribute toward closing costs, but not the down payment. The down payment is part of the borrower’s cash requirement to close the loan. The lender is required to verify the sourcing of all down payment funds (including gift funds from other people) to insure the money does not come | more...

 
FHA Home Loan Down Payment Help For Borrowers

FHA Loan Down Payment Help For Borrowers

Even with the FHA loan program’s low 3.5% down payment requirement, some borrowers struggle to come up with the minimum required investment for the purchase of an existing home or construction of a new home. Fortunately, there is home loan down payment assistance available for borrowers from local agencies (the FHA itself does not provide down payment funds) and there are resources you can search to find the down payment help you need in your local area. But there are rules for down payment grants, home buyer grants, and other forms of down payment help. FHA loan rules say any down payment help must meet FHA requirements and must not be used in ways that are against the rules. For example, some well-intentioned groups may offer down payment funds to | more...

 
HUD Releases Housing Reform Recommendations

HUD Announces Housing Reform Recommendations

The Department of Housing and Urban Development has issued recommendations to the President for housing reform, including attention on down payment assistance programs and cash-out refinancing. According to a press release issued on the HUD official site, this is NOT the same housing finance reform plan, which was developed by the U.S. Treasury Department. There are major differences between the two in some respects including the HUD language discussing the need to focus on “the core mission” of the FHA where home loans are concerned. It’s the view of the Treasury Department (as stated in the plan) that any changes to the core of what has traditionally been considered an FHA loan program could be detrimental. The Treasury Department plan states, “…any proposal to fundamentally change the housing finance system | more...

 
Does The Fed Interest Rate Cut Also Cut Mortgage Loan Rates?

The Confusion Over Closing Costs Versus Down Payment

Some borrowers get confused over the differences between closing costs and the required minimum down payment of 3.5% needed for FHA home loans. The confusion often comes over what is considered a down payment versus what is considered to be part of the borrower’s closing costs. The most basic thing to know is that the FHA home loan down payment is a standalone payment. It is NOT reduced by the amount of closing costs you pay such as the lender’s fee, appraisal costs, title fees, inspection fees, etc. But that isn’t all-FHA home loan rules, for example, do not permit your down payment to come from the seller. But FHA loan rules DO permit your seller to contribute a certain amount toward the closing costs of the loan. Note the | more...

 
Real Estate, Millennials, And Down Payments

FHA Loan Down Payment Rules: When More Is Required

FHA home loan down payment rules allow for a low 3.5% down for borrowers who qualify with FICO scores in the 580-or-above category. FHA loan minimums do not address lender standards, which may be higher, but that is one reason why it’s important to shop around for the right FHA lender. The low FHA loan down payment is one reason why FHA mortgages can be so attractive, especially for first-time home buyers. But when will a borrower be required to put a higher amount down on the mortgage? There are several instances to be mindful of. FHA Loan Transactions That Require 15% Down: Identity Of Interest The FHA Single Family Loan Handbook, HUD 4000.1, says there are circumstances where 15% down is required; often when there is an identity of | more...

 
FHA Home Loan Down Payment Rules: Cash To Close Sources

FHA Home Loan Down Payment Rules: Cash To Close Sources

FHA home loan down payment rules include requirements for the sourcing of funds used to make that down payment and/or provide cash to close the deal. Down payment funds and sources of cash to close must be properly documented by the lender to insure the cash does not come from unacceptable sources such as non-collateralized loans (payday loans, credit card cash advances, etc.) or in the form of “gift funds” that are not really gifts but have an expectation of repayment. When discussing the permitted sourcing of FHA home loan down payments or cash to close, many borrowers want to know if certain kinds of sources are acceptable to the lender. That can include proceeds from the trade-in of a manufactured home, the proceeds from the sale of real estate, | more...

 
FHA Home Loan Down Payment Assistance

FHA Home Loan Down Payment Assistance

The down payment is one of the daunting things for first-time home buyers-coming up with the cash to put the minimum required 3.5% (of the adjusted value of the home) may seem like an uphill task, but fortunately the FHA loan program guidelines permit the use of approved down payment assistance programs. These programs are not offered by the Department of Housing and Urban Development; potential borrowers will need to seek out these down payment assistance programs in their local area. The rules the FHA provides to organizations wishing to offer down payment assistance includes the requirement that down payment gifts or grants must not come with an expectation of repayment. They also include the requirement that such funds be properly sourced and transferred to the borrower. But FHA rules | more...

 
FHA Home Loan Down Payment Assistance

FHA Construction Loan Facts

Some borrowers, including some first-time home buyers, don’t want to buy someone else’s house. They prefer a home built to suit; real estate built from the ground up using borrower-approved plans. This kind of home loan is available as an FHA mortgage from participating FHA lenders. It is called an FHA One-Time Close construction loan and it is an excellent alternative to buying an existing construction house. What do you need to know about FHA One-Time Close Construction Loans? For starters, these loans do not have a different down payment requirement than other FHA mortgages-the same low down payment options exist for borrowers with qualifying FICO scores. Your lowest possible down payment on a home built using an FHA construction loan is the same 3.5% as other FHA mortgage options. | more...

 
Four Things to Remember About Home Loans and Credit Scores

How Much Is My Down Payment With An FHA Mortgage?

Many buyers want to know how much their FHA loan down payment requirement is. The answer is not as easy as quoting a percentage since there are variables that can affect the amount of the down payment you will be required to make. FHA Loan Down Payment Basics There is no fixed dollar amount for the down payment-each transaction will have its’ own required down payment amount based on the calculation below. The lowest down payment you can make with an FHA mortgage is 3.5% of the adjusted value of the home. There are circumstances where a higher down payment is required because a borrower’s FICO scores don’t qualify them for maximum financing. In those cases, FHA loan rules dictate that where a borrower’s FICO scores are between 500 and | more...

 
HUD Announces Expanded Disaster Relief Options

HUD Announces Changes To Down Payment Assistance Rules

The Department of Housing and Urban Development and the FHA have issued a Mortgagee Letter announcing changes to the rules for down payment assistance. FHA loan program rules permit the borrower to get assistance with the minimum required down payment-this assistance can come in the form of gift funds from family or friends, money from employers, or even down payment assistance programs. Government entities are permitted to provide such down payment help, too. In all cases, the down payment assistance must meet FHA loan requirements. Gifts cannot be loans in disguise; there must be no expectation of repayment of a gift of down payment funds. And now, thanks to revisions to the rules governing these issues in HUD 4000.1, government entities must meet certain requirements when providing down payment funds. | more...