Articles Tagged With: FHA Guidelines

September 28, 2017

Can I Get a Single Family FHA Loan For A Multi-Unit Home?

Can I get an FHA single family loan for a multi-unit home? Some borrowers get confused by the wording in the name of the FHA Single Family Home Loan program. It’s easy to assume that FHA single family mortgages are for one-bedroom houses, but that is definitely not the case. FHA loans are approved for homes that feature as many as four living units-a four unit property can definitely be financed with an FHA loan assuming the borrower is qualified to be approved for the mortgage. One-to-four unit properties purchased with FHA mortgages must be the primary residence of the borrower-you must agree to occupy the home purchased with an FHA mortgage loan usually within approximately two months after loan closing (unless the borrower makes other arrangements with the lender | more...

Rehab Refinance Loans, Effects Of The Pandemic, And Interest Rates

September 25, 2017

Which Debts Are Evaluated For My FHA Home Loan?

By Bruce Reichstein

Which of my debts are evaluated for an FHA home loan? Borrowers sometimes get nervous about this issue, especially if they are concerned about carrying too much debt to qualify for a home loan. FHA loan rules governing how a borrower’s debt load must be reviewed by the lender are found in HUD 4000.1. One section titled “General Liabilities and Debts” states: “The Mortgagee must determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation.” The basic answer to the question may depend on whether the lender is manually underwriting the mortgage loan or using the TOTAL system to evaluate the application. TOTAL is an “automatic” underwriting tool, and when using this tool, the lender is instructed as | more...

September 21, 2017

Do I Need The Consent Of My Non-Borrowing Spouse To Get An FHA Mortgage?

By Joe Wallace

Do I need the consent of my non-borrowing spouse to get an FHA mortgage? That’s an important question, and the answer varies depending on the laws of your state. The rules governing this issue are found in the FHA loan handbook, HUD 4000.1. The section answering this question is short, but the implications will vary, again, depending on state law. But why? FHA home loans and other major lines of credit are often affected by state laws, including what are known as “community property laws”. If you reside in a community property state, that means that state law dictates how the debts incurred in a legal marriage are viewed legally. In community property states, spouses share the financial responsibility for all debts incurred for the duration of the legal marriage. | more...

September 19, 2017

FHA One-Time Close Construction Loans: How They Work

By Bruce Reichstein

How do FHA One-Time Close / Single-Close construction loans work? These FHA mortgages are for borrowers who want to have a home built for them from the ground up rather than looking for an existing home to purchase and move into right away. Many participating FHA lenders offer these loans for “stick built” homes, which are homes built on-site (as opposed to a manufactured home which is delivered pre-built in sections and assembled). What are the rules for this type of FHA construction loan? From the FHA/HUD official site, we learn that a One-Time Close loan is also known as a “construction to permanent” loan. “A construction to permanent mortgage combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional | more...

September 13, 2017

HUD Announces Disaster Relief For Puerto Rico

By Bruce Reichstein

In the wake of Hurricane Harvey and Hurricane Irma, the Department of Housing and Urban Development has made announcements about disaster relief as certain parts of the country become federally-declared disaster areas. The latest of these is a press release from HUD on relief efforts to Puerto Rico. According to a press release on the FHA/HUD official site, “HUD will speed federal disaster assistance to the Commonwealth of Puerto Rico and provide support to homeowners and low-income renters forced from their homes due to Hurricane Irma.” That assistance includes a 90-day moratorium on foreclosure action for FHA mortgages, the availability of FHA rehab loans for disaster victims, and more. According to HUD, these options can help those in the affected areas recover, rebuild, or purchase a new home to replace | more...

August 18, 2017

Can My Seller Pay Some Of My Closing Costs?

By Bruce Reichstein

Can my seller pay some of my closing costs? The basic answer is, “yes, within certain limits.” FHA loan rules permit certain expenses to be negotiated between buyer and seller, including the contribution of allowed costs. How does it work? FHA Loan Rules For Interested Party Contributions HUD 4000.1, the FHA loan handbook, defines “interested parties” as “sellers, real estate agents, builders, developers or other parties with an interest in the transaction”. HUD 4000.1 states that such interested parties are permitted to offer payments on “origination fees, other closing costs and discount points” within the bounds of FHA loan rules (more on that below), state law, and lender standards. What Payments Can An Interested Party Contribute? HUD 4000.1, page 232, states that an interested party or parties may contribute towards | more...

August 9, 2017

How Much Can I Borrow With An FHA Refinance Loan?

By Joe Wallace

How much can I borrow with an FHA refinance loan? There are many reasons why a borrower might need to know early in the planning stages how much might be allowed, and knowing the FHA loan rules in this area can definitely help save time before you apply for the loan. Knowing what kind of refinance loan you might need is a big help in answering the question. Why? Because the actual dollar amount for some FHA refi loans may vary for the same property depending on circumstances. The amount of an FHA rehab loan, for example, will be higher since there are laborers and materials to be paid for, inspections, etc. The same home that gets an FHA Streamline Refinance loan instead might have a lower dollar amount depending | more...

July 25, 2017

What Can I Improve With An FHA 203(k) Mortgage?

By Bruce Reichstein

An FHA 203(k) mortgage is basically a rehab loan, which can be used as a new purchase loan or a refinance loan for the purpose of repairing/rehabbing an eligible property. The FHA single family home loan handbook, HUD 4000.1, has a list of requirements and guidelines for FHA 203(k) loans, which includes a set of allowable improvements as well as a list of things FHA loan money cannot be used for. Let’s examine what is permitted with an FHA 203(k) loan first. Borrowers who are approved for an FHA rehab loan may use the loan for any of the following projects acceptable to the lender: – costs of construction, repairs and rehabilitation; – architectural/engineering professional fees; – the 203(k) Consultant fee subject to the limits in the 203(k) Consultant Fee | more...

July 19, 2017

Who Can Refinance An FHA Loan?

By Bruce Reichstein

Who can refinance an FHA loan? There are rules and requirements for refinancing an FHA mortgage loan that include prohibitions to ensure fair lending, but also restrictions on who may refinance depending on the status of the applicant as a borrower or co-borrower on the original loan. The rules that govern who can refinance an FHA loan, and how it may be done, are found in the FHA handbook, HUD 4000.1. There, we learn: “A party who has a financial interest in the mortgage transaction, such as the seller, builder or real estate agent, may not be a co-Borrower or a Cosigner. Exceptions may be granted when the party with the financial interest is a Family Member.” Furthermore: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take | more...

June 13, 2017

What Is Mortgage Insurance And How Does It Work?

By Bruce Reichstein

“What is mortgage insurance?” is a common question for those new to the home loan process. Do you understand how it works? It helps to define the two things referred to by industry professionals as mortgage insurance. There is mortgage insurance which the borrower pays for as a requirement of the FHA loan, then there is the “mortgage insurance” referred to in FHA loan rules which is something else entirely. Note: What we are discussing here is not hazard insurance, which may be a requirement on some, but not all FHA loans. FHA Mortgage Insurance For The Lender The FHA single family home loan handbook, HUD 4000.1, refers to “mortgage insurance” when discussing the FHA’s role in insuring the loan to reduce the risk for the participating lender. On page | more...