January 21, 2022

Vimeo Channel YouTube Channel

Articles Tagged With: Single Family Handbook 4000.1

FHA Loans And The 100 Mile Rule: A Reader Question

A reader asked us a question about FHA loans and “the 100 mile rule”. “I am currently looking to purchase a home with FHA financing 5 miles from my current home in California. The current home I own is secured with a conventional loan. I would like to rent this home out and buy a larger home and finance it FHA because I dont have very much saved up for a larger down payment. Does the 100 mile rule apply to me?” The reader is asking in response to a post we made earlier this year about military FHA borrowers and occupancy rules for FHA loans. This quote from that original post, referencing FHA loan rules in HUD 4000.1, seems to be the issue of most concern for the reader: | more...

 
HUD

HUD Brings Charges Against Ohio Housing Authority

The Department of Housing and Urban Development is bringing charges against the Ohio Housing Authority for what it says are violations of the Fair Housing Act. At first glance, a Fair Housing Act case against a state or local housing authority might not seem to have much to do with FHA mortgage loans, but the fact is that fair housing issues affect people at all levels of the home loan process, whether planning or actually purchasing. The family or individual that needs to rent, utilize public housing, or take other steps to find or use housing before purchasing a home is entitled to the same rights as those currently purchasing. Violations of those rights can negatively affect a potential borrower’s ability to find an purchase a home, which is why | more...

 
Happy Holidays 2018

Identity Of Interest Transactions: Another Reader Question

A reader asks, “I have a client that inherited property along with 2 siblings from the Mothers estate. The client has resided in the subject property for 1 year and now wants to buy the other siblings out. Is it correct, that this scenario would meet the exempt status of identity of interest guidelines?” The reader is asking this question in reference to an earlier post we wrote about FHA loans and identity of interest transactions. An FHA mortgage typically requires a minimum 3.5% down payment for new purchase loans. But the required down payment can be higher if there is an “identity of interest” as described in HUD 4000.1: “An Identity-of-Interest Transaction is a sale between parties with an existing Business Relationship or between Family Members. Business Relationship refers | more...

 

Employment Verification and FHA Loans

A reader asked us recently, “I have employment for over 2 years. I get paid by check with no taxes taken out, payments on time. Would I qualify for FHA?” FHA loans require a variety of financial qualifications including FICO scores, your history of payments on financial obligations, your debt-to-income ratio and other factors. Lender standards and FHA loan rules both apply, as do some state laws and other regulations. There’s no single overriding factor that determines a borrower’s ability to qualify for an FHA mortgage, a variety of factors come into play as mentioned above. Sometimes one or more factors can disqualify a borrower, it’s true-a low FICO score, debt ratios that are too high, missed payments in the last 12 months leading up to the loan application, etc. | more...

 

FHA Loan Rules For Up Front Mortgage Insurance Premiums (UFMIP)

When you buy a home with an FHA mortgage, there’s a requirement to pay an Up Front Mortgage Insurance Premium or UFMIP. This is not to be confused with Private Mortgage Insurance (PMI), and according to the FHA loan rules published in HUD 4000.1 most FHA loans require UFMIP. “Most FHA mortgage insurance programs require the payment of UFMIP, which may be financed into the Mortgage. The UFMIP is not considered when calculating the area-based Nationwide Mortgage Limits and LTV limits.” There are exceptions as found in HUD 4000.1: –Streamline Refinance and Simple Refinance Mortgages used to refinance a previous FHA-endorsed Mortgage on or before May 31, 2009 –Hawaiian Home Lands (Section 247) –Indian Lands (Section 248) How is the UFMIP calculated? “The UFMIP charged for all amortization terms is | more...

 

FHA Adds Additional Temporary Guidelines For Condos

The FHA and HUD eased certain condo guidelines earlier this year, and have since added a second round of temporarily eased “approval provisions” for condo projects to be added to the FHA approved list for single family home loans. According to an FHA mortgagee letter, both rounds of these temporarily eased guidelines are designed to help more people get into FHA condo loans. According to Mortgagee Letter 2015-27, “It is anticipated that the issuance of these additional temporary provisions will increase the pool of condominium projects eligible for FHA approval, thus increasing affordable housing options for first-time and low to moderate income homebuyers. The requirements of this Mortgagee Letter are applicable to all Title II programs including the Home Equity Conversion Mortgage (HECM) insurance program, unless otherwise stated.” One area | more...

 
Mortgage Loan Rate Trends

FHA Loan Down Payments

Borrowers have lots of questions about FHA loan down payment rules, and this can be a tricky issue for some in the beginning–do you know what is required for an FHA loan down payment? For starters, the source of your down payment funds will be scrutinized. You can’t provide a down payment from a credit card cash advance or any type of non-collateralized loan. You cannot use payday loans for your down payment. Sources of down payment funds that are acceptable to the FHA include cash saved by the borrower, retirement funds (meeting FHA criteria) stocks or other assets that have been cashed in, certain types of gift funds from a relative may be acceptable if the funds meet certain FHA requirements, etc. Down payments for FHA mortgages are a | more...

 

FHA Loan Appraisal Rules: “Second Appraisal” Requests

We get lots of questions about the FHA appraisal process in the comments section. Here is one of the most recent, which raises an important question about “replacement appraisals” or any request for a new appraisal that has to do with a dispute over valuation of the property. The reader asks, “I have a buyer who is buying a home. The home they are buying already had an appraisal completed. That deal fell through and my buyers offer was accepted. The sellers agent said that the original appraisal came in short and asked that we order a new one.” “He said his seller insists on a new appraisal because the original one done a few week before was less that the purchase price. Is is possible to request a new | more...

 

FHA Home Loans For Veterans

There are many home loan options for veterans of the United States military, including the VA loan program. But some veterans choose the FHA home loan program instead–there are many reasons why some might choose FHA over a VA loan, and for those who are considering the option, there are some important things to remember about the FHA mortgage loan or refinance loan program. The first is that FHA home loans and refinance loans offer many similar features to VA loans. For example, veterans applying for an FHA mortgage have the option of getting an Energy Efficient Mortgage (EEM) option added to the loan, much in the same way as the VA loan program. An FHA EEM requires the lender and borrower to work together to determine the cost effectiveness | more...

 

FHA Loan Assumptions

There are people on both sides of a potential loan assumption transaction–home owner and house hunter–who want to know if FHA home loans are assumable. Is it possible for a person who has purchased a home with an FHA mortgage loan to sign that loan over to someone else and allow them to assume responsibility for the loan and take ownership of the home? FHA loan rules say that loan assumptions are permitted for FHA single family home loans. Depending on when the loan was issued, there may be different requirements. For example, “If the loan application was signed by the borrower before December 1, 1986, the FHA-insured mortgage generally contains no restrictions on assumability.” That information is found in HUD 4155.2 Chapter Three and basically allows the loan assumption | more...