Articles Tagged With: Joint Loan

August 12, 2015

FHA Loans, Debt-To-Income Ratios, and Cosigning

We received an excellent reader question recently about how being a co-signer on someone else’s financial obligation might affect a borrower’s chances for an FHA mortgage loan. Does being a co-signer have any influence on how the lender views your credit? Your debt-to-income ratio? FHA loan rules published in HUD 4155.1 address these issues. Chapter Four Section C has a heading titled “Contingent Liability On Cosigned Obligations” and addresses this reader question directly. The rules begin by describing what is considered a contingent liability for the purposes of processing an FHA mortgage loan appication: “A contingent liability exists when an individual is held responsible for payment of a debt if another party, jointly or severally obligated, defaults on the payment.” Simple enough. But the FHA goes further in the next | more...

April 28, 2015

FHA Loan Rules For Purchasing A Second Home: A Reader Question

By Joe Wallace

A reader asks, “I applied for a fha loan my contract on the house I am to purchase expires Thursday. I found out Wednesday night that I have to apply for an exception for the 2 fha loan rule and the house I am currently in and have on the market is a fha. I did not know this.” “I qualify for both loans but have no clue how to apply for an exception. I am sure I should be able to get it as I travel 1 hr 10 mins to 1 hr 40 mins each way to work due to traffic increase over the years and the new home is only 10 mins from work. Help! My lender is now help and has dragged this on for several | more...

February 21, 2015

FHA Loans For Investment Property? A Reader Question

By Joe Wallace

A reader asks, “I have a grand daughter who is looking to buy a fore close house asking only 12, 000.00.. Is there a program out there to help her. some one had started doing repairs to the house. a new bathroom, up dated kitchen tile kitchen and bathroom floors. She wants to use this property as a investment.” The FHA single family home loan program is intended for owner-occupied residences only, so the basic answer to this question (where FHA single family home loans are concerned, which is the focus of our blog) is no–at least for new purchase home loans (see below for more information). That’s not to say that the borrower might not be able to find some state or local program made available to investment property | more...

November 17, 2013

FHA Single-Family Loan Rules For More Than One Loan

By Joe Wallace

FHA loan rules for single-family homes are designed to prevent investors from using these loans to buy more investment properties. An FHA borrower applying for a single-family home loan under the FHA program is required to use that home as the principle residence, and cannot buy, then turn around and vacate the property in order to rent it out. According to FHA loan rules found in HUD 4155.1, “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will | more...

September 13, 2013

Can a VA Borrower Have More Than One FHA Loan at a Time? The Rules

By Joe Wallace

One of the more common questions we’ve been asked recently is connected to FHA loan rules about investment properties and whether or not an FHA borrower can have more than one FHA-insured home loan at a time. According to the FHA official site, “To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable).” There are some exceptions, though. The FHA official site features a Q&A section about FHA loans that includes this quote, saying “We do not object to homebuyers using FHA mortgage insurance more than once if compatible with the homebuyer’s needs and resources” as described by FHA | more...

September 6, 2013

FHA Loan Rules on Second Loans: A Reader Question

By Joe Wallace

A reader asks, “I am a co-borrower on another FHA loan. Do I not have the right to acquire a FHA loan where I would be the primary borrower and the secondary residence would be my primary residence? I was informed I could not have or be on two FHA loans by my tentative mortgage company.” FHA loan rules covering issues like these are found in HUD 4155.1, Chapter Four Section B. It states, “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower.” “FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the | more...

June 6, 2013

FHA Loan Rules: Contingent Liability

By Joe Wallace

FHA loan rules cover a wide range of circumstances and situations. Many of these rules were written in anticipation of needs that, while not as common as some, still might be in demand many times over the course of a single fiscal year based on the sheer volume of FHA mortgage loan applications. One set of rules governs something known as “contingent liability”, which the FHA loan rulebook describes in HHUD 4155.1 Chapter Four, Section C. “A contingent liability exists when an individual is held responsible for payment of a debt if another party, jointly or severally obligated, defaults on the payment.” This sort of obligation may be known as a co-sign agreement, a co-borrower or co-obligor arrangement. FHA loans require any borrower who has a contingent liability to list | more...

January 18, 2013

FHA Home Loans On Investment Properties: A Reader Question

By Joe Wallace

A reader asks, “As a homeowner, can I purchase an investment property with a FHA loan? FHA loans for single-family homes are designed for principal residences, which means the borrower must intend to live in the home as his or her primary residence. FHA loan rules state, “To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable). Any person individually or jointly owning a home covered by a mortgage insured by FHA in which ownership is maintained may not purchase another principal residence with FHA mortgage insurance except under the situations described below. Properties previously acquired as investment properties | more...

December 3, 2012

FHA Loan Rules For Multiple Residences: A Reader Question

By Joe Wallace

A reader asks, “Any person individually or jointly owning a home covered by an FHA- insured mortgage in which ownership is maintained may not purchase another principal residence with FHA insurance, except in certain situations as described in HUD 4155.1 4.B.2.d.” “What are the exemptions? FHA loan rules, as published in HUD 4155.1 Chapter Four, Section B, state: “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance.” There are | more...

September 26, 2012

FHA Loan Rules For Principal Residences

By Joe Wallace

A recent reader question about FHA loan requirements for occupancy begs the question; what does the FHA consider a “principal residence” or “primary residence” and will the FHA approve of a second FHA mortgage for those who purchase single-family, owner-occupied property? According to the FHA loan rules, found in HUD 4155.1, in the section titled “FHA-Insured Mortgages on Principal Residences and Investment Properties” you’ll find the following: “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower.” If you want to buy a home, this means the FHA expects you to use it AS a home. Additionally, “FHA will not insure a mortgage if it is determined that the transaction was designed to use | more...