Articles Tagged With: FHA Handbook

March 1, 2013

FHA Loan Reader Questions: First Time Homebuyer Requirement?

A reader asks, “I’m not a first time home buyer, I have a conventional loan for a home that I’m planning to keep as a rental home. Can I qualify for a purchase FHA loan on a primary home?” One of the common misconceptions about FHA home loans is that you MUST be a first-time home buyer in order to qualify for one. This is not true. You may have state or local homebuyer assistance programs in your area that do require the applicant for that program to be a first time buyer, but FHA loans are open to all qualified applicants. The real issue in this reader question has more to do with debt-to-income ratios (DTIs)–will the FHA lender approve a buyer who already owns a home? Single-family new | more...

February 28, 2013

FHA Loan Requirements and Your Personal Data

By Joe Wallace

We sometimes get questions about certain practices required to verify and approve the information given on a borrowers FHA home loan application. Borrowers are rightly concerned about protecting their privacy and personal data; what do FHA loan rules say about lenders who ask for account numbers, Social Security information and other private information? FHA loan applicants should know that the FHA does require these types of personal data in order to properly verify and approve the loan. According to FHA loan rules as described in HUD4155.1: “The lender may ask the borrower to sign a general authorization form that gives the lender blanket authority to verify information needed to process the mortgage loan application, such as • past and present employment records • bank accounts and • stock holdings.” FHA | more...

February 25, 2013

FHA Loans, Prepayments and Due-On-Sale Clauses

By Joe Wallace

When shopping for a home, some borrowers come into the house hunt with a strategy that includes paying or pre-paying a chunk of the mortgage loan up front. This isn’ necessarily a down payment per se, but it is something to consider when setting a budget for a home loan and the anticipated mortgage loan payments. Does the FHA allow such a strategy? Can borrowers pay down the loan principal? FHA home loans do feature the ability to pre-pay a portion of the loan. This can be helpful for many reasons including lowering mortgage payments and saving money over the lifetime of the loan by reducing the principal and the amount of interest paid on that principal. According to HUD 4155.2 Chapter Three, Section A, “A borrower may prepay a | more...

February 22, 2013

FHA Loan Limits For High Cost Counties: FHA Loan Questions

By Joe Wallace

Many borrowers want to know why FHA home loans are available for the same size and type of properties, but in larger or smaller amounts depending on the market. Why aren’t FHA loan amounts standardized? The basic answer to this is that all housing markets are different, and the costs in one market are not necessarily the same for another. A two-bedroom home with a garage in Bangor, Maine might not cost the same to build or finance as a similar home in Cleveland, Ohio. The same goes for properties located on either coast—how much would that two-bedroom home build and sell for in Los Angeles or New York? To address these issues, the FHA has created a table that lists the FHA loan limits for counties where the costs | more...

February 15, 2013

Minnesota Condo Association Settles Housing Discrimination Complaint

By Joe Wallace

A recent press release issued on the FHA/HUD official site announces a settlement in a housing discrimination case. According to HUDNo.13-026, “The U.S. Department of Housing and Urban Development (HUD) announced today that a homeowners association and property managers for an Edina, MN, condominium will pay more than $40,000 under a Consent Order resolving allegations that they refused to allow children under the age of 18 to live at the property in violation of the Fair Housing Act.” The release adds, “According to a condominium owner’s complaint filed with HUD, the condominium association told him and his wife that they were violating the association’s document by allowing their minor children to live with them for more than 30 days in a calendar year. In addition, the condominium association levied fines | more...

February 12, 2013

New “Final Rule” On Housing Discrimination Standards

By Joe Wallace

The FHA and HUD have a new yardstick to measure housing discrimination and take appropriate action where needed, according to a recent press release issued by the Department of Housing and Urban Development. According to the press release HUDNo.13-022, HUD is “issuing a final rule to formalize the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect.” “Through the issuance of this Rule,HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner,” said HUD Secretary Shaun Donovan. “This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination.” As the press release states, HUD is “statutorily charged with the authority and responsibility for interpreting and | more...

February 8, 2013

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “My credit score is 678. When my husband tried to get his FICO score, he was told he couldn’t because he did not meet the minimum scoring requirements. (He is just starting to build credit and has nothing). Will we be able to qualify for an FHA loan based on my credit score?” FHA loan rules have a lot to say on this. In HUD 4155.1, you’ll find the following under the section titled Analyzing The Borrower’s Credit: “Neither the lack of credit history nor the borrower’s decision not to use credit may be used as a basis for rejecting the loan application. We also recognize that some prospective borrowers may not have an established credit history. For those borrowers, and for those who do not use | more...

February 7, 2013

FHA Loan Reader Questions: FHA Loans After a Foreclosure

By Joe Wallace

A reader asks, “I had a bankruptcy discharged in 2009. My mortgage was part of this bankruptcy however the bank did not foreclose until 2012. I am employed and have an average credit score of 678. Would I qualify for a FHA loan on a new property?” This is a tricky question because it includes both a bankruptcy AND a foreclosure. In such cases it’s best to contact the FHA directly for advice. Does the borrower’s two situations–bankruptcy and foreclosure–have any special consideration? There are different possibilities depending on the type of bankruptcy (not mentioned in the reader question), but let’s examine the FHA rules for the borrower’s more recent foreclosure issue. Can a borrower apply for an FHA mortgage in 2013 if there was a foreclosure action in 2012? | more...

February 1, 2013

FHA Loan Amounts: A Reader Question

By Joe Wallace

A reader asks, “My son and I have a combined income of $68,000 yearly. His credit score is 643 and mine is 639. I also have a IRA worth $190,000 what do we qualify for from a FHA Loan?” This is a type of question that comes in frequently and unfortunately the answer isn’t as simple as doing the math and returning a loan amount. There are many variables that go into calculating an FHA home loan amount including the borrower’s financial qualifications, the lender’s requirements, the cost of the home and other factors. A house for sale in one part of the country for $150,000 might be worth much or (or less) in another part of the country. Since FHA loans for new purchases are calculated on the fair | more...

January 22, 2013

U.S. Bank Settles Discrimination Claim

By Joe Wallace

A press release on the FHA/HUD official site announces a settlement in a disability discrimination claim brought by HUD against U.S. Bank. According to HUDNo.13-008, “Minnesota-based U.S. Bank National Association will pay $12,000 to a loan applicant with disabilities under a Conciliation Agreement settling allegations that the bank required him to provide unnecessary documentation to establish he would continue receiving disability income for three years before they would approve his mortgage loan.” As the press release states, the Fair Housing Act makes it an offense to discriminate “in the terms and conditions of a loan based on a person’s disability, including by imposing different loan application or qualification criteria.” According to the press release, a complaint was filed with HUD after U.S. Bank required a borrower to show proof that | more...