Articles Tagged With: FHA Loan Regulations

October 5, 2023

FHA Loans, Bank Accounts, And Verifiable Income

Some FHA borrowers want to know if they can use a business bank account for verifiable income purposes when applying for an FHA mortgage. Unfortunately, this question is open-ended, and the answers depend on circumstances. These issues are typically handled on a case-by-case basis. Does the business bank account belong to the borrower because he or she is a freelancer or self-employed? Is this an expense account that belongs to an employer? Such situations may have different issues affecting whether funds deposited to this account may be used as verifiable income. Those who are self-employed must provide documentation, including tax records and other paperwork that demonstrate that the income from the business is reliable and likely to continue. Freelance or contract employees would likewise be required to provide evidence that | more...

FHA One-Time Close Construction Loans In 2019

September 12, 2022

FHA Loans and Home Inspections

By Joe Wallace

We get many questions about the FHA appraisal process. One variation on a common theme? The questions we get involving readers who opted not to get a home inspection, relied on the FHA appraisal process alone in determining whether the house was defect-free or not, and had complaints about the home later on. This is a situation common enough that it makes sense to emphasize the importance of NOT relying on the FHA appraisal process as a means to detect flaws or defects with a home that could be purchased with an FHA mortgage. Why is relying on the appraisal alone a bad idea? For starters, the FHA and HUD official site makes it very clear that the FHA appraisal is NOT an inspection. “Passing” the FHA appraisal process only | more...

June 17, 2022

Who Sets FHA Loan Interest Rates?

By Joe Wallace

Who sets FHA loan interest rates? The answer to that question involves several factors-many potential FHA borrowers asking this question really want to know more than who the regulatory body is for FHA loan interest rates-they also want to know how rates are affected by other factors such as FICO scores and credit history. So who DOES set FHA mortgage loan interest rates? The Fed sets monetary policy for the United States including the current interest rate. But when the Fed sets this rate, it is NOT directly changing mortgage rates. Investor reaction to the Fed’s rate adjustments DOES affect home loan interest rates. Fed action doesn’t directly change interest rates and consumers should know that the Department of Housing and Urban Development doesn’t try to control these rates, either. | more...

April 28, 2022

Preparing For An FHA Mortgage Loan

By Bruce Reichstein

Applying for an FHA home loan doesn’t happen overnight–it takes time to plan, budget, examine your credit, and save money for the fees and expenses associated with an FHA mortgage. If you’re new to the home buying process and don’t know where to start, a very good way to begin to get an idea of how much home you can afford with your present income, debts, and financial obligations. Do you want to know how much you can borrow, and how much your payments might be? You can use an online mortgage loan calculator to estimate these amounts. Remember that the amount of the loan you might qualify for and the amount of mortgage payment you can actually afford may be two different things altogether, which is why many web-based | more...

October 13, 2020

FHA Home Loans: What Kind Of House Can I Buy or Build?

By Joe Wallace

FHA loan rules in HUD 4000.1 include guidelines for lenders explaining what types of property are eligible, and what types are ineligible, for an FHA mortgage. You might not realize at first that an FHA mortgage can be used for properties other than typical suburban homes; FHA mortgages can be used to buy or build a typical family house, but also to purchase condo units, manufactured housing, and much more. The list of property types you can choose from includes the previously mentioned types but also: detached or semi-detached dwellings Manufactured Housing townhouses or row houses individual units within FHA-approved Condominium Projects You can buy existing construction, new construction that has never been occupied, or have a home built from scratch using an FHA One-Time Close construction loan. What some | more...

May 22, 2019

What Is An FHA REO Home?

By Joe Wallace

The FHA Real Estate Owned program or FHA REO program has gotten some media attention lately, which likely has more people wondering what exactly this program is. The HUD REO program, sometimes known as HUD Homes, is described on the FHA / HUD official site as “…a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim”. The HUD Home Store is the official HUD site used to list these HUD REO homes for sale to the public, real estate brokers, state and local governments and nonprofit organizations. What does the general public need to know about buying HUD REO homes? According to HUD, | more...

December 4, 2017

FHA Home Loan Rules For Salary, Hourly, Part-Time Income

By Joe Wallace

Not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That’s why FHA home loan rules in HUD 4000.1, the FHA single family home loan handbook, include different instructions to the lender for a diverse range of income sources. FHA Loan Rules For “Primary Income” HUD 4000.1 has sections for hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” and defines it as follows: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” “Current Pay” Versus “Projected Pay” According to HUD 4000.1, FHA loan | more...

Credit Scores For An FHA Home Loan: When Low Credit Is Not Bad Credit

August 3, 2017

How Do FHA Loan Appraisals Work?

By Bruce Reichstein

How do FHA loan appraisals work? This question is a vital one because some get the appraisal process confused with a home inspection and the two are not the same. The importance of an FHA appraisal in your loan process has to do with the lender getting information that helps calculate the fair market value of the home, while the home inspection gives the borrower information needed to make an informed purchase. FHA appraisals are governed by the rules in the FHA loan handbook, HUD 4000.1, which says the lender is required to, “order an appraisal from an Appraiser who is listed on the FHA Appraiser Roster and is qualified and knowledgeable in the specific market area in which the Property is located. The Mortgagee must evaluate the Appraiser’s education, | more...

July 27, 2017

How FHA Loan Modification Works

By Bruce Reichstein

In our previous blog post, we discussed some of the basics of FHA foreclosure avoidance and loan modification. But how does FHA loan modification work? FHA HAMP, also known as the FHA Home Affordable Modification program is a way for home owners to avoid foreclosure through a permanent loan modification. But in order to become eligible for FHA HAMP, borrowers have to meet certain criteria as described on the FHA/HUD official site. Who is eligible to apply for FHA HAMP? “Mortgagors with FHA-insured mortgages that do not qualify for other loss mitigation programs and with adequate debt-to-income ratios. Homeowners must successfully complete a trial payment plan before becoming a full participant in the program.” The trial payment plan is the key to the success of the borrower’s involvement with HAMP. | more...

June 7, 2017

2017 FHA Loan Home Requirements

By Bruce Reichstein

What are FHA loan home requirements? How can you tell if a property meets FHA loan minimum standards? These are important questions to ask when planning for your new home loan. FHA loan home requirements are found in HUD 4000.1, the FHA single-family home loan handbook. HUD 4000.1 states that while all homes to be purchased with an FHA mortgage must pass the FHA appraisal process, doing so in no way acts as a guarantee that the home is free of defects. A borrower should understand that the FHA appraisal is for the lender, while a home inspection (optional but extremely important) is for the borrower. In general, FHA loan home requirements include rules which state that the roof must be in good repair, that the electrical and plumbing system | more...