Articles Tagged With: Single Family Handbook 4000.1

April 21, 2014

FHA Loan Down Payments

One important question about any home loan transaction involves the down payment. How much should a borrower save? When it comes to FHA home loans, there are rules about the minimum required “cash investment” (down payment) specified in HUD 4155.1 Chapter Two. The amount of the down payment depends on the appraised value and/or the sale price of the home. According to Chapter Two, the maximum amount the borrower can get with the FHA loan guarantee is calculated as follows “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by the lesser of the property’s • sales price, subject to certain required adjustments, or • appraised value.” The next step according to this portion of Chapter Two is calculating | more...

March 18, 2014

FHA Loan Rules: Condominiums

By Joe Wallace

FHA loan rules permit single-family mortgages on suburban homes, mixed-use properties that meet FHA loan requirements, townhomes and condominiums. For a condo to qualify for an FHA mortgage, it must be on or be added to a list of FHA approved condo projects. But some borrowers aren’t sure what constitutes a condominium–what do FHA loan rules recognize as a condo unit as opposed to other types of property? As stated above, FHA requires condo units to be approved. The rulebooks states, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured.” The rules for FHA loans on what constitutes a condo are found in HUD 4155.1, Chapter Four Section B under the heading “Requirements For Condominium Eligibility”. Those rules begin by stating: “A condominium | more...

March 17, 2014

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

By Joe Wallace

There are plenty of situations that come up when more than one person wants to borrow on an FHA home loan, but there are just as many circumstances where two people may want to own a property purchased with an FHA mortgage, but only one of the two is applying for the loan itself. FHA loan rules for this are found in HUD 4155.1 Chapter Four under the heading, “Title Issues Regarding Non- Borrowing Spouses or Other Parties in Interest”. The rules here state: “If two or more parties have an ownership interest in the property, but only one of the parties is applying for the loan (and credit qualifies for the loan on his/her own), it is not required that the non-applicant individual(s) execute the mortgage note and security | more...

February 7, 2014

FHA Loan Qualifications And Old Credit Problems: A Reader Question

By Joe Wallace

A reader asks, “I have the income qualifications, the credit score qualification, and the down payment amount. However I also have outstanding amounts from old debt collection agencies. Do old debt collections really matter if I have everything else? Do the amounts of these old collections matter also?” The answer to this reader question isn’t as simple as a yes or no reply–there are a number of factors that may apply. How large the old collections could be one of those factors, the nature of them, and how old they are may all factor into the equation. Lender standards would also play a part–some lenders may or may not be as forgiving as others depending. All that said, let’s examine what FHA loan rules say about the matter in HUD | more...

December 23, 2013

FHA Loan Rules For Section 8 Income & Government Assistance: Reader Questions

By Joe Wallace

We’ve gotten several questions lately from readers about FHA loans, government assistance and Section 8 income. What does the FHA loan rulebook say about government assistance and Section 8 income used to qualify for an FHA guaranteed home loan? When it comes to government assistance, FHA loan rules found in HUD 4155.1, Chapter Four say, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.” The continuation of the income is key, so borrowers using government assistance income to qualify should be prepared to submit documentation of the income according to the lender’s requirements. Borrowers should know that FHA loan rules also address government assistance that isn’t expected to | more...

October 7, 2013

FHA Loans For More Than One Home: A Reader Question

By Joe Wallace

A reader asks, “I have recently split up with my girlfriend of 16 years we have never been legally married. She is not willing to refi to get my name off the house. I have not lived in the house for over a year and need to get another FHA loan on a house I am having built. I qualify financially. Is it possible for me to get another FHA loan since I no longer live in the house and the co-borrower does?” FHA loan rules discuss the guidelines for having more than one FHA loan in HUD 4155.1 Chapter Four Section B. That section says of this particular circumstance, “A borrower may be eligible for another FHA-insured mortgage if he/she is vacating a residence that will remain occupied by | more...

August 28, 2013

FHA Loan Reader Questions: Lender Requirements

By Joe Wallace

A reader asks, “My husband and I both have credit scores of 628 and 635, and no late payments on any current accounts for over 1 year. Our mortgage broker told us in order to qualify for the 3.5% down we have to have a credit score of over 660 to qualify for FHA. Is this true? and if it is, do we qualify for any other FHA loan? It has been over 4 years since there has been anything derrogative on our credit reports, and the items that are on there from 4 yrs ago or more are due to an economic hardship of losing our business.” One thing home loan applicants should know about the FHA loan program is that FHA loan minimum standards for FICO scores and | more...

June 24, 2013

FHA Loan Reader Questions: Down Payment Assistance

By Joe Wallace

A reader asks, “I want to move and was qualified for an FHA but needed to know if there is any programs to help assist with the down payment. I know there is an option for sellers to offer 6% sellers assist but is there any else to cover the rest?” The FHA itself does not offer any type of down payment assistance program. In the past there have been down payment assistance programs offered on a state or local level, but some federal laws have banned certain types of down payment assistance. Others not banned by federal law would be obliged to meet FHA loan rules as to the source of down payment money (see below). What does this mean? FHA loan rules require all borrowers to make a | more...

April 25, 2013

VA Loan Answers: The Difference Between “Maximum Loan Amount” and “Maximum FHA Loan Guaranty”

By Joe Wallace

There is a commonly asked question about FHA loans that pertains to the amount of loan a borrower is eligible to apply for; what is the FHA maximum loan amount? There is no set, across-the-board limit for an FHA mortgage. Instead, the loan amount is determined in part by the appraisal and in part by the FHA mortgage guaranty limits for that county. Those limits are not on the actual amount the loan is for, but rather for the amount the FHA will insure. According to FHA loan rules in HUD 4155.1, “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by the lesser of the property’s • sales price, subject to certain required adjustments, or • appraised value.” | more...

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

By Joe Wallace

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...