Articles Tagged With: FHA Loan Rules

October 18, 2024

When Can I Refinance An FHA Loan?

When can I refinance an FHA loan? That is a common question and one that is addressed in the FHA loan handbook, HUD 4000.1. There are rules that govern how and when you can refinance your home loan and those rules will vary depending on the type of refinance loan you seek. Most FHA home loans, including refinance loans and even reverse mortgages, require occupancy as a condition of loan approval. In the case of FHA Cash-Out Refinance loans, occupancy is necessary for at least one year before the new loan. From HUD 4000.1: “Cash-out refinance transactions are only permitted on owner-occupied Principal Residences. The Property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence for the 12 months prior to the | more...

What You Should Know About FHA Home Loan Credit Checks As A First-Time Home Buyer

October 3, 2024

How Much Do I Put Down On An FHA Home Loan?

By Joe Wallace

There are persistent myths and misunderstandings about home loans. One persistent myth is that FHA mortgages are only approved for first-time home buyers. Another is that FHA loans are only for low to moderate-income borrowers. And a third–and the focus of our article–is that you have to make a 20% down payment on a home loan. What’s the reality? FHA home loans do NOT require a 20% down payment, even if you are at the lower end of the qualifying credit score range. According to FHA loan rules, the most you are required to put down on an FHA mortgage (on paper, according to the FHA) is 10%. That is for borrowers who do not have FICO scores that qualify them for 3.5% down. So why do people think you | more...

September 18, 2024

FHA Home Loans: How Much Will You Pay Per Month?

By Joe Wallace

How much house can you afford with an FHA loan? If you aren’t sure about the final amount of your monthly mortgage payment as a new house hunter, you aren’t alone. Fortunately, there are things you can do to get an estimate on how much to expect your monthly payments to be. Do The Right Math Don’t make the mistake of doing “the wrong math” for your FHA loan. You should not just use the home’s sale price and possible interest rate to make the calculation. Why? The results you get don’t include other costs you may have to pay each month, and your expectations will be skewed (most likely) to be too low in terms of the actual monthly financial commitment. Home Loan Math Variables The previously mentioned calculation | more...

September 10, 2024

Bankruptcy Versus FHA Loan Approval

By Joe Wallace

Declaring bankruptcy, either Chapter 7 or Chapter 13, impacts your credit standing. Though it might be a necessary financial step, it disrupts your normal financial activities, including getting a mortgage. But is declaring bankruptcy the end of your ability to buy a new home? Not necessarily. Thanks to “seasoning periods” a borrower waits out after bankruptcy to be declared fit to borrow to buy a home, bankruptcy doesn’t permanently bar you from buying a home. Before discussing the waiting periods for mortgage loans, let’s differentiate between Chapter 7 and Chapter 13 bankruptcies: Chapter 7 Bankruptcy This involves liquidating your non-exempt assets to pay off creditors. While it provides a quicker resolution, it can negatively affect your credit score for up to a decade. Chapter 13 Bankruptcy This allows those with | more...

July 31, 2024

Post-Disaster FHA Loan Options

By Joe Wallace

In 2024, the United States experienced a series of severe storms, floods, fires, and natural disasters, leading to devastation. But some affected regions, particularly in Maui County, Hawaii where wildfires caused significant damage, were damaged last year but still need federal help. In response, the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) extended disaster relief options originally implemented in 2023 for Maui County. These included the extension of the FHA’s foreclosure moratorium program and other forms of assistance in late summer 2024. And other homeowners across the nation may also be affected by their own federal disaster area. If you are a homeowner with damage to a home purchased with an FHA mortgage and live in a federal disaster area, the information below can | more...

July 29, 2024

FHA Loans And Multi-Unit Properties

By Joe Wallace

FHA home loans are intended for owner-occupiers. The FHA loan occupancy requirement states that the borrower must begin using the home purchased with an FHA loan within a specified time after closing (usually within 60 days.) But FHA loan rules also permit owner-occupiers to buy multi-unit properties. For multi-unit homes, the borrower must occupy at least one unit but is free to rent out the unused spaces in the house to others. FHA loan rules limit the number of units to four in these transactions. If a borrower intends to apply for an FHA loan for a home with multiple units, it may be tempting to try to convince the lender to factor in any potential income from such rental as part of the applicant’s debt-to-income ratio. Is this permitted? | more...

July 1, 2024

Comparing Home Loan Offers

By Joe Wallace

Are you planning to buy a new home? You can find the right home loan by applying a similar process you use to find the right house. In fact, shopping around for the right mortgage loan is just as important as shopping around for the right house. If you are considering an FHA mortgage to buy, renovate, or build a home, you’ll want to make the same kind of informed decisions about the lender and the loan. Comparing lenders and loans is the way to do that. But there are some tips you can follow to make that process more streamlined. Research Multiple FHA Lenders While on paper, FHA loan terms and conditions such as FICO score requirements seem to be standardized, the FHA minimum FICO score requirements are just | more...

June 17, 2024

FHA Manufactured Housing Rules You Should Know

By Joe Wallace

FHA announced changes to the FHA loan limit structure in early 2024. Those changes included updating FHA Title I manufactured loan limits which had not been changed in 15 years at press time. The FHA Title I Manufactured Home Loan program offers higher loan limits now, part of an effort to provide more affordable housing. “The increases better align with current market prices and are expected to encourage more lenders to offer the program to homebuyers seeking to purchase manufactured homes and the lots on which they sit” according to a press release at HUD.gov. Making Manufactured Housing More Available These changes are the first serious FHA manufactured home loan update since 2008. HUD Secretary Martha Fudge calls the move an option to alleviate an “affordable housing supply crisis” by | more...

May 28, 2024

Before Your First FHA Mortgage Payment

By Joe Wallace

Do you know what to expect after your FHA mortgage closes? Borrowers should know a few common things about what to expect after closing day, such what to expect from payments and mortgage statements. What To Know About FHA Loan Mortgage Statements Not all home loans have the same terms and conditions, so be sure to review your contract carefully to learn how your statement will be delivered each month or if the loan stipulates you have a payment book to rely on instead. Assuming your mortgage payment notification automatically comes to you electronically or by U.S. Mail is not safe–make a point to learn what your contract says. Do you need an alternative option? Ask early. Your mortgage statement should have information about what you owe. This includes any | more...

May 1, 2024

What To Know About FHA Loan Application Documents

By Bruce Reichstein

There is documentation required to process your home loan application and knowing what you need to submit in advance will speed up your home loan application journey. Do you know what your home loan or refinance loan transaction requires of you? The lender requires tax documents, information about the sources of your down payment, access to your credit reports, and more. But there are rules about who provides these documents, and you’ll need to be aware of them when gathering your paperwork. FHA Loan Rules On Documentation Some of the information your lender needs comes from you personally. This includes your photo identification and proof of legal residence in the USA (which may be required where applicable). FHA loan rules say you do not have to be a citizen to | more...