Articles Tagged With: FHA Requirements

March 4, 2016

Ordering a Second FHA Appraisal: The Rules in HUD 4000.1

There are many questions about the FHA appraisal process–we get many in the comments section asking about the nuances of FHA appraisals. One typical question has to do with when a second appraisal is appropriate or permitted. Can a second FHA appraisal be ordered if the borrower or lender doesn’t agree with the outcome of the original? HUD 4000.1 spells out the rules for FHA appraisals including “second appraisal” requirements. They include the following: “The Mortgagee 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. The Mortgagee may order a second appraisal for Mortgages that are in accordance with requirements on Property Flipping.” FHA policy, based on the reading above, is clear–you can’t | more...

February 29, 2016

Mortgage Rate Trends: Higher Friday

By Joe Wallace

Mortgage rates moved higher on Friday, pushing closing costs up for some, actual rates up for others. At the end of the day many were still offering a best execution 3.625% for 30-year fixed rate conventional mortgage loans. FHA mortgage loan rates are holding in a range between 3.25% and 3.5% depending on the lender and other factors. FHA mortgage loan rates tend to vary more among participating lenders than conventional rates, so your experience may vary. As always, the rates mentioned here are best execution rates, meaning your FICO scores, loan repayment history and other financial qualifiers will play a big role in your access to rates at or near the ones listed here. Best execution rates are not available to all borrowers or from all lenders. Even though | more...

Can I buy a manufactured home with an FHA loan?

November 6, 2015

FHA Loan Rules, Non-Borrowing Spouses, and Judgments

By Joe Wallace

A reader got in touch recently to ask if a financial judgment against a non-borrowing spouse could be a liability when applying for an FHA mortgage loan. The answer really depends on whether the borrower resides in a community property state, and whether community property laws in that state might have something to say about how a legally married couple applies for a major financial obligation such as a home loan. FHA loan rules have specific guidance for the lender in community property states when it comes to issues like debts, judgments or other financial issues affecting the non-borrowing spouse. These rules are found in HUD 4000.1 and state: “If the Borrower resides in a community property state or the Property being insured is located in a community property state, | more...

September 24, 2015

FHA Loan Income Requirements: A Commission Question

By Joe Wallace

We recently got a question regarding commission income and how it may be reviewed by the lender. More specifically, the question is about whether the nature of the reader’s income is truly “commission income” and how the lender might view that on the FHA loan application. The reader asks: “On my pay stub next to earnings it says commission, but this actually isn’t true commission pay. We aren’t selling anything, we deliver to stores. Its just how my company decided to pay us. So my question is do I fall under this category of commission based salary, where I would need a year of income or would that not matter in my case?” Unfortunately, the answer to this question would come from the lender. The loan officer’s job is to | more...

September 22, 2015

FHA Loans And Federal Debt

By Joe Wallace

Here is a common type of question about applying for an FHA mortgage loan when you have owe a debt to the federal government: “Can anyone tell me what the guideline for FHA loans regarding payment plan with IRS when you do not own property and you owe taxes? ” FHA loan rules here are basically concerned with giving lenders a yardstick to measure a borrower’s creditworthiness with regard to federal debt–and that means that a lender is responsible for insuring the borrower is not delinquent on the payments of that debt. Borrowers who are delinquent and are shown to be delinquent through the lender’s due diligence are not eligible for an FHA mortgage loan until such time as they have corrected the delinquency to the satisfaction of the government. | more...

August 28, 2015

FHA Announces New Guidelines For Energy Efficient Upgrades

By Joe Wallace

The FHA has issued a press release announcing new guidelines for FHA borrowers who want to add energy-efficient upgrades to their homes. According to HUDNo.15-112, the announcement comes as part of the White House National Clean Energy Summit. The Obama Administration and FHA have new guidelines, “supporting borrowers seeking to make energy efficient improvements to their homes. In today’s announcement, FHA expressed the intent to allow borrowers to use Single Family FHA financing for properties with existing Property Assessed Clean Energy (PACE) loans that meet certain conditions” according to the press release. These new tools will help homeowners make smart choices for their pocketbooks and for the environment, said HUD Secretary Julin Castro, quoted in the press release. Castro adds, HUD and the Obama Administration are proud to invest in | more...

August 21, 2015

FHA Single Family Home Loan Rules On Owner-Occupier Status and Investment Properties

By Joe Wallace

FHA loan rules on the nature of “owner-occupied” residences state that a single-family mortgage loan guaranteed by the FHA is only for borrowers who want to live in the home they buy. The “owner occupier” nature of FHA home loans is secured by rules in HUD 4155.1 designed to prevent investors from using this type of FHA mortgage. You’ll find the guidelines for owner-occupied residences in Chapter Four, Section B, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrowers principal residence within 60 days of signing the security instrument, with continued occupancy for at | more...

July 10, 2015

HUD Announces Final Rule On Fair Housing

By Joe Wallace

The FHA/HUD official site has announced a final rule that will promote and clarify fair housing requirements. A press release titled, “HUD Announces Final Rule On Affirmatively Furthering Fair Housing” announces both new procedures and simplified fair housing rules. According to the press release, the new final rule will “equip communities that receive HUD funding with data and tools to help them meet long-standing fair housing obligations in their use of HUD funds. HUD will also provide additional guidance and technical assistance to facilitate local decision-making on fair housing priorities and goals for affordable housing and community development.” For many decades, the communities that receive funding from the Department of Housing and Urban Development are required to observe fair housing rules so that all eligible applicants can receive help getting | more...

April 16, 2015

FHA Loan Rules For Single Family Homes: What You Can and Cannot Buy

By Joe Wallace

How much do you know about buying a home with an FHA mortgage? Do you know the kinds of property you can and cannot buy with an FHA loan? Here is a little list of what’s possible and what’s not. As you read about what you are permitted to buy with an FHA mortgage, remember that not all lenders offer all types of FHA home loans. You may find some lenders who do not issue FHA loans on mobile homes, others who may have higher FICO and other credit qualifying standards for the homes they do offer mortgage loans for, etc. Always compare lenders and shop around for the best deal. “Existing Construction” Homes An existing construction home is, as the name implies, one that has already been built. Existing | more...

April 6, 2015

FHA FICO Score Rules: A Reader Question About “Median Scores”

By Joe Wallace

A reader asks, “Would like to buy a home.. My current scores are 607 Experian, 579 TU, 554 EQ. Wifes scores are mid 500′s. Which score would be looked at.. I just paid off some collections so my score is not updated if its going to change. Should I wait another year before I apply or go for it. Would we have to put 3.5% down our salary is about 85k a year. Looking for a home in the range of 180k, also due to our low scores would we have a high rate?” The rules for FHA loan FICO score review are found in HUD 4155.1. Chapter Four, Section A is where you will find a heading titled, “Definition of Minimum Decision Credit Score”. The lender is instructed: “If | more...