Articles Tagged With: FHA Loan Rules

July 25, 2023

Which FHA Loan Is Right For You?

There are some home loan options some won’t consider. A shorter loan term is one. In an era where lower monthly payments seem to be the priority for some borrowers more than saving money over the entire course of the loan, a longer loan term makes sense. But for some, these are essential aspects of the loan to consider. If you can afford to pay more each month on your mortgage, would you do so to shorten your loan term? FHA Condo Loans, FHA Manufactured Homes Are you surprised there are separate FHA loans for each property type listed above? These different loans are needed simply because each property type’s considerations differ. Manufactured homes can’t be older than regulations allow, but existing construction homes don’t have the same rule. Condo | more...

July 21, 2023

Will Your FHA Home Loan Be Approved?

By Joe Wallace

Will your FHA home loan be approved or denied? There are several reasons why your loan application could be turned down, and some of those reasons have more to do with the property than with the borrower’s credit history or FICO scores. And in some cases, getting turned down for a mortgage is the borrower’s fault due to credit history or FICO score issues. But what about when the borrower’s credit, employment, and other qualifying factors are acceptable to the lender, but the home loan application is turned down anyway? For some, it could be a question of the property’s condition, location, or type. Location Counts Some don’t realize at first that to be approved for an FHA residential home loan, the property cannot be situated within a specific range | more...

July 20, 2023

Home Loan Approval Questions And Answers

By Joe Wallace

What does it take to get approved for an FHA mortgage? The answers may surprise you. Did you know there are some persistent myths about the FHA home loan program that stop some people from considering it as an option? FHA Loan Myths You Should Know Some believe FHA loans are need-based mortgages, believing that only those with income below a certain level can apply. This is not true. A percentage of new borrowers sometimes believe they must be a first-time home buyer to use government-backed loan programs like FHA home loans. When it comes to some loan programs (USDA loans) this is closer to being true, but not for FHA loans. You can find programs aimed at first-time buyers. But in many cases this is for those who qualify | more...

July 17, 2023

How To Get Cash Out Of Your Home

By Joe Wallace

When you buy a house with an FHA loan, you start building equity with your 3.5% down payment. Once you begin making FHA loan mortgage payments, you continue to build equity in your property over the lifetime of the mortgage. But how do you take equity out of your home? We explore some important options below. Home Equity Loans And Home Equity Lines Of Credit The FHA does not offer a home equity line of credit, this is an option available from many conventional lenders and offers you a line of credit using your house as the collateral. The closest an FHA mortgage gets to a home equity loan is the FHA Cash-Out Refinance loan, which does tap into the unused equity in your house. FHA Cash-Out Refinance Loans FHA | more...

July 13, 2023

FHA Loan Approval and Late or Missed Housing Payments

By Bruce Reichstein

What is the connection between FHA loan approval and late or missed housing payments? The simplest formula given to most borrowers is that you should come to the home loan application process with nothing but on-time payments on all financial obligations for the last 12 months leading up to the day you apply. Not all borrowers take that advice, and many want to know what the consequences of having a late or missed payment might be; in some cases the issue may be more problematic than others. This is true of having late or missed housing payments on your record. The lender will review your record of housing payments as one of the indications that a borrower is a satisfactory credit risk. But what do the FHA loan rules tell | 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...

July 10, 2023

FHA Energy Efficient Mortgages In 2023

By Joe Wallace

In an older article, we discussed the FHA Energy Efficient Mortgage program, an option for those buying or building a home with an FHA loan. We decided to review the older article and note any program changes along the way. We originally wrote, “Borrowers who choose the FHA Energy Efficient Mortgage (EEM) option as part of their FHA loan can get up to $8,000 in additional funds added to the loan amount for the express purpose of adding approved energy-efficient upgrades.” Is that dollar amount still applicable? According to HUD 4000.1, the maximum amount you can borrow in 2023 is as follows: “The maximum amount of the energy package that can be added to the Base Loan Amount is the lesser of: According to the FHA loan rules in the | more...

June 29, 2023

FHA Mortgage Loans: Second Appraisals

By Joe Wallace

If you or the seller don’t agree with the results of the appraisal, is it possible to get a second appraisal and a reconsideration of value of the home? FHA loan rules specifically prohibit ordering a second appraisal just because one party or the other is hoping for a different result. HUD 4000.1, the FHA Single-Family Lender’s Handbook, states the lender is prohibited from “ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required.” FHA loan rules note the lender is permitted to order a second appraisal “for Mortgages that are in accordance with requirements on Property Flipping”. But what circumstances permit a second appraisal? HUD 4000.1 says that the original mortgagee or lender is allowed to | more...

June 27, 2023

FHA Loan Seller Concessions: What’s Allowed?

By Joe Wallace

When it is time to negotiate the price of a home using an FHA home loan, borrowers should know that sellers can, and often do, contribute to the buyer to make the deal more enticing or help the borrower reduce up-front costs. Such contributions are known as seller concessions. The FHA Lender’s Handbook says for FHA mortgages, concessions are permitted within a certain set of boundaries and are limited to six percent of the sales price of the home. Any seller contributions that exceed that six percent limit require a dollar-for-dollar reduction in the loan amount. According to FHA loan rules, “Sales concessions influence the price paid for real estate. For this reason, FHA requires that appraisers identify and report sales concessions and properly address and/or adjust the comparable sale | more...

June 16, 2023

FHA Loans For Mixed-Use Property

By Joe Wallace

A common reader question about FHA mortgages has to do with purchasing mixed-use property with an FHA loan. Here is a variation on the theme: “I want to buy a 4-unit building with a store front. Is there any type of loan that I can apply for to make this purchase?” The good news is that this type of purchase may be possible; FHA loan rules permit the purchase of properties between one and four units. For mixed-use property, commercially zoned residential property or other non-traditional purchases, HUD 4000.1 states: “The non-residential portion of the total floor area may not exceed 49 percent. Any non-residential use of the Property must be subordinate to its residential use, character and appearance.” “Non-residential use may not impair the residential character or marketability of | more...