Articles Tagged With: FHA Loan Questions

February 21, 2017

FHA Appraisal Timing: A Reader Question

A reader asks us a question about FHA appraisal rules this week in our comments section. “Buyers want my house but dont want to process the sale until the end of April. It is now Feb. 19th 2017. I dont have a problem with that but do want some kind of guarantee that they are going to buy it.” “They are going FHA. Should I ask them to have and pay for an appraisal & inspection now as a good faith issue? If I do hold the house for 2 months I am the only one to suffer if they dont buy. Also who does the appraisal and inspection if the loan is FHA?” As for the timing of the appraisal and home inspection, that would be up to the | more...

February 14, 2017

FHA Loans And Work Permits: A Reader Question

By Joe Wallace

Are work permits required for FHA loans when the applicant is a legal permanent resident alien or non-permanent resident alien? A reader asks, “So if a person had a work permit but never renewed it, but has been doing taxes with his/her ss# and is currently working does that mean there not qualify for FHA? Or does the legal status have to be current?” FHA loan rules in HUD 4000.1 are clear that a borrower is not required to be a U.S. citizen in order to qualify for an FHA mortgage loan. However, legal status is required-those in the United States illegally cannot qualify for an FHA loan. For permanent resident aliens, HUD 4000.1 states: “A Borrower with lawful permanent resident alien status may be eligible for FHA-insured financing provided | more...

what is mortgage insurance and how does it work?

February 3, 2017

Non-Occupying Co-Borrowers: A Reader Question

By Bruce Reichstein

FHA loan rules state that in cases where there are non-occupying co-borrowers, different down payment requirements may apply. According to FHA loan rules, “A Non-Occupying Borrower Transaction refers to a transaction involving two or more Borrowers in which one or more of the Borrower(s) will not occupy the Property as their Principal Residence.” A reader got in touch recently to ask a question about the FHA loan down payment requirement in situations that feature non-occupying co-borrowers. “I see below under 4155.1 (page 78 of 413) that unrelated individuals that can document evidence of a longstanding, substantial family type relationship would qualify for maximum financing. So since a cousin is classified as unrelated yet they’ve know each other since birth and have been living as family since then would then qualify | more...

January 25, 2017

Appraisal Questions: Bricks

By Joe Wallace

A reader asked a question about the FHA appraisal process in our comments section recently; “I am currently selling my house. The buyer is getting a FHA loan.” “The appraiser asked us to repair any broken brick on the outside of the house. My husband scraped off the parts of the bricks falling apart and filled each hole with mortar and painted it as close to the brick as he could. Will this be an acceptable fix according to the appraiser?” When an FHA appraiser requires corrections as a condition of loan approval, borrowers will likely have to pay for an additional compliance inspection, which allows the appraiser to verify that the corrections were made to the satisfaction of FHA minimum standards. Whether or not a certain correction or repair | more...

January 12, 2017

FHA Loan Rules For Part-Time Income

By Bruce Reichstein

FHA loan rules require the lender to verify both employment and income. The lender must determine that a borrower’s income is both stable, and likely to continue for the purpose of making the mortgage loan payment. But what kinds of employment can a lender use to qualify the borrower? A reader got in touch with us recently to ask, “What if I have a 20 year old borrower that graduated HS in 2014. She has 2 jobs (receptionist at both). One shes had for 2 years 9 months and only works 15 hours a week and the second shes had for 1 year 4 months and puts in 20 hours a week. Will FHA accept both incomes as qualifying income?” FHA loan rules covering this issue are found in HUD | more...

December 20, 2016

Deferred Obligations and FHA Loans

By Joe Wallace

A reader asks, “How do you calculate monthly payments for estimated payment to begin when schooling is complete?” With student loans, there are two types of payments, one of which may apply in this case. Ongoing payments and deferred payments have different requirements. It’s likely safe to assume that this reader question refers to how a lender is to process student loan information as part of the applicant’s debt-to-income ratio. FHA loan rules in HUD 4000.1 include instructions to the lender for processing student loan debt information both as a “deferred obligation” that has not come due yet, and as an ongoing payment where applicable. HUD 4000.1 instructs the lender to use the actual amount of the student loan payment wherever possible, but in cases where the loan is deferred | more...

How much can I borrow with an FHA refinance loan?

December 15, 2016

FHA Mortgages: Five Simple Things To Know

By Joe Wallace

If you are considering an FHA home loan, there are a few simple basics to keep in mind about your loan application that will help you in both the planning stages and the application stage of the loan. Did you know? 1. FHA mortgages require a down payment, but that down payment is lower than many conventional mortgages. FHA home loans require a down payment of 3.5%, but you may encounter conventional mortgage loan requirements as high as 20%. This is an important factor when trying to plan a budget for your new monthly mortgage payment. FHA mortgages have down payments calculated as a percentage of the adjusted price of the home. 2. FHA mortgages require an appraisal to calculate the fair market value of the property and to insure | more...

December 15, 2016

FHA Loan Basics: A Reader Question

By Joe Wallace

A reader asks, “I really don’t understand why i have to pay PMI and MIP. I had credit problems a bankruptcy in 2013 , it was recorded and its been almost 4 years and my score is 709 that the middle score i have hardly no debts, 6% of income. I was told I have to pay the MIP up front of 1.75% and also 240 PMI monthly with mortgage. That’s a little too much, is there a way out of this? I also did not want taxes and insurance added, I’m putting 3.5 percent down. My loan officer said I had to pay the insurance and add taxes to my loan.” It’s not entirely clear from this reader question whether the loan is an FHA mortgage or not, but | more...

December 7, 2016

FHA Loans and Credit Report Issues

By Joe Wallace

A reader asks us a question about FHA loans and credit issues this week: “I have applied for a mortgage and I have a judgement on my credit that is part of a class action law suit. Does this judgement affect my chances for getting a mortgage with FHA. Or do I need to pay off this judgement. Is there any exceptions to this situation?” FHA loans are governed by the rules in HUD 4000.1, which include instructions to the lender specifically about judgments. What does the FHA view as a “judgment”? Here’s the definition from the rule book: “Judgment refers to any debt or monetary liability of the Borrower, and the Borrowers spouse in a community property state unless excluded by state law, created by a court, or other | more...

December 6, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

“I am getting ready to purchase a home. It has been under contract for 6 weeks. 1.5 weeks out, ‘…there is concern that there may be moisture. Please have a specialist determine if there is no moisture or mold present’. My contractor that will do renovations says there is no mold present; however, ‘his word does not count because he is not a mold specialist’. Now I am 3 days from closing and a mold remediation person is $900 and a week turnaround time. What are my options?” FHA appraisals are an important part of the home buying process, and where corrections are required by the FHA appraiser, those corrections are usually ordered as a condition of loan approval. The reader question doesn’t specify if this was a correction or | more...