Articles Tagged With: FHA Loan Requirements

June 1, 2026

FHA Loans and Income Verification: “Future Income”

Borrowers who apply for an FHA home loan are required to list the income they want the lender to consider on the application. This is required for multiple reasons; the lender must calculate the applicant’s debt-to-income ratio and determine whether the borrower appears able to afford the new mortgage payment and other recurring obligations. A borrower who has too much going out and not enough qualifying income may not be approved for an FHA loan. But there’s another reason for the requirement; an FHA lender must verify and document the employment and income used to qualify the borrower. The lender cannot simply accept on good faith that the information listed on the application is accurate. When a borrower is approved for an FHA-insured mortgage, that approval comes only after the | more...

January 23, 2026

FHA Loan Rules: Co-Borrowers and Co-Signers

By Bruce Reichstein

Many first-time homebuyers use FHA loans because of their flexible qualification standards. In some cases, a borrower may choose to apply with a co-borrower or a co-signer to strengthen the loan application. FHA loan rules allow both options, but they are not the same, and HUD applies different requirements depending on which role is used. Understanding the difference is critical before applying. FHA Distinction Between Co-Borrowers and Co-Signers FHA guidelines are governed by HUD Single Family Housing Policy Handbook 4000.1, which replaced HUD 4155.1 and is the current controlling authority. Under FHA rules: Co-borrowers (occupying or non-occupying) Take title to the property Are obligated on the mortgage note Must sign all loan and security instruments Share full legal responsibility for repayment Co-signers Do not take title to the property | more...

January 20, 2026

FHA Loan Rules for Loan Approval: Federal Debts and Tax Liens

By Bruce Reichstein

FHA loan approval rules include specific requirements regarding unpaid federal debts and federal tax liens. These rules are outlined in HUD’s Single Family Housing Policy Handbook 4000.1 and are enforced by FHA-approved lenders. When you apply for an FHA mortgage, your lender must evaluate your income, employment history, credit profile, and all monthly financial obligations. This includes determining whether you have delinquent federal non-tax debt or delinquent federal tax debt, both of which can affect FHA loan eligibility. Understanding how FHA treats federal debts and tax liens can help borrowers avoid unnecessary delays or loan denials. FHA Loans and Delinquent Federal Non-Tax Debt According to HUD Handbook 4000.1, FHA lenders are prohibited from approving loans for borrowers who have delinquent federal non-tax debt. Federal non-tax debt includes obligations such as: | more...

January 12, 2026

FHA Loan Rules: Title Issues For Non-Borrowing Co-Owners and Spouses

By Bruce Reichstein

FHA Loan Rules: Title Issues for Non-Borrowing Co-Owners FHA loan transactions do not always involve every property owner being a borrower on the mortgage. In many cases, two or more people may hold ownership interest (be on title) to a property purchased with an FHA-insured loan, even though only one of those individuals applies for and qualifies for the mortgage itself. FHA policy allows for these arrangements, provided certain conditions are met. Non-Borrowing Owners and the FHA Mortgage Note Under current FHA guidelines, if two or more parties have an ownership interest in a property but only one party applies for and independently qualifies for the FHA loan, the non-borrowing owner is not required to sign the mortgage Note. The borrower who applies for the FHA loan is the only | more...

April 9, 2025

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 good place to start is 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 mortgage payment you can afford may be two different things altogether, which is why many web-based tools include multiple | more...

October 5, 2023

FHA Loans, Bank Accounts, And Verifiable Income

By Joe Wallace

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...

August 7, 2023

FHA Loan Reader Questions: Foreclosure Wait Periods

By Joe Wallace

Here is a variation on a common reader question. “I had a foreclosure on my house. What is the waiting period before I qualify for an FHA mortgage?” The first thing to do is call the FHA at their toll-free number, 1-800 CALL FHA, and ask for a referral to an FHA/HUD-approved housing counselor in your local area. A housing counselor can assist in areas like this with advice on how to proceed toward becoming a homeowner once again after a foreclosure, bankruptcy, job loss, or other issues. The answer to the reader’s question varies greatly depending on circumstance, lender standards, and whether or not the home foreclosed upon was purchased with an FHA mortgage. While the FHA loan program does include options for borrowers who have experienced a qualifying | more...

July 11, 2023

FHA Loan Options Post-Bankruptcy

By Joe Wallace

There is a common reader question that goes something like this: “I had a bankruptcy discharged recently. How long do I have to wait to purchase another home? I have been working on my credit and improving my scores.” Post-bankruptcy, a borrower must work hard to establish the best credit possible in order to qualify for a new home loan. Lenders may be willing to work with borrowers with credit scores starting at around 620 or higher. But credit isn’t the only factor determining how soon after bankruptcy you can apply for a home loan. The nature of a borrower’s wait time to apply after bankruptcy depends on the nature of the bankruptcy. The rules governing this are found in the FHA Single-Family Lender’s Handbook, which advises that bankruptcy “does | more...

June 22, 2023

FHA Loan Rules For Income: Investments, Trusts, and Promissory Note Payments

By Joe Wallace

Part of the FHA loan approval process involves the lender verifying an applicant’s income. FHA rules state that for purposes of calculating a borrower’s debt-to-income ratio, only verifiable income can be counted in that ratio. Do FHA rules allow a borrower’s interest or dividend payments from investments to be counted as verifiable income? For some borrowers, this can be an important question. According to the FHA Lender’s Handbook, “The Mortgagee must verify and document the Borrower’s Investment Income by obtaining tax returns for the previous two years and the most recent account statement.” Additional instructions to the lender for this issue include the requirement that when making the calculation. “The Mortgagee must subtract any of the assets used for the Borrower’s required funds to close to purchase the subject Property | more...

June 20, 2023

FHA Loan Qualifications

By Joe Wallace

We get many reader questions about FHA home loans. A common variation on one such question goes like this: “What qualifications are needed to be approved for an FHA home loan?” We get questions like these quite often. Some people mistakenly assume that FHA loans are only for first-time home buyers or those with lower incomes. This is not true; any qualified FHA loan applicant may be approved for an FHA mortgage. This is true regardless of whether the applicant has purchased a home before, has an income above or below a certain threshold, etc. If the borrower can realistically afford the loan and meet the other lender and FHA requirements, loan approval is possible. There is no minimum or maximum income level for FHA loans–instead, the lender will measure | more...