fha and hud: Residency And Occupancy: FHA Loan Rules
- 10/16/16 06:07 AM
FHA loan rules have requirements for both U.S. residency for potential borrowers, and occupancy for approved borrowers. Did you know that HUD 4000.1 states that an FHA loan applicant does not have to be a U.S. citizen in order to apply for an FHA mortgage or refinance loan?
U.S. citizenship is not required, but legal documentation showing the applicant's status will be a condition of loan approval. The FHA loan program is open to both non-permanent resident aliens and lawful permanent resident aliens. The FHA loan rules also instruct the lender, "Non-U.S. citizens without lawful residency in the U.S. are not eligible … (1 comments)
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fha and hud: FHA Loans & Appraisal Rules: A Reader Question
- 08/26/16 01:42 AM
A reader asks, "I have been told by my realtor and the lender that an appraisal on a house I own will be on record for 180 days. They said that the appraised value will be on record and no other FHA appraisal can be made during this 180 day period. Is there a master list that other lenders and appraisers cross reference during this six month period? My reading of your blog indicates that if another FHA buyer makes an offer on my property. a different appraisal would need to be performed."
HUD 4000.1 does indeed contain language that leads one … (2 comments)
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fha and hud: FHA Loan Rules For Overtime Income
- 08/18/16 11:07 PM
A reader asks, "Can I use my current overtime income if I’ve been working at this company 20 months but my previous company I also had overtime which I worked there for 1 year and my previous before that I worked for 4 years with overtime?"
FHA loan rules require the loan officer to verify income that will be used toward calculating the borrower's debt-to-income ratio. Only verifiable income can be used, which means the lender must determine that the income is stable, reliable, and likely to continue. Income from a variety of sources may be considered.
Some FHA loan applicants have seasonal … (1 comments)
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fha and hud: FHA Loans and Social Security Income
- 08/09/16 10:55 PM
A reader asks, "I dont understand if I have a 1099 and I have a benefits letter, and the letter that states at the end of the year what I am getting for the following year, why I am being asked or can be asked for something that states I will get social security for 3 years? There is nothing that says social security will give this to me or a name for it."
FHA loan rules governing Social Security income are found in HUD 4000.1, page 195 under "Other Sources Of Effective Income". The rules require the lender to make a … (0 comments)
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fha and hud: FHA Mortgage Loan Terms: Understanding Equity
- 07/24/16 11:55 PM
Let's Talk About Home Equity from FHA.com video on Vimeo.
Equity is an important term to understand when you're applying for any kind of mortgage loan, but for some loans equity is a larger factor than others. For example, when you apply for a new purchase FHA loan to buy a home, you start out with 3.5% of the adjusted price of the home as your equity. That's the amount of your down payment, and the equity grows over time with the number of payments you make.
When you apply for a home equity loan, a home equity line of credit, or an … (3 comments)
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fha and hud: FHA Loans Versus Conventional Loans
- 07/08/16 12:52 AM
What are the differences between FHA home loans and conventional loans? There are several, some features of mortgage loans can vary depending on the lender, and state law may also affect how your home loan is handled depending on circumstances, but there are a few very important general differences to keep in mind when comparing FHA loans to conventional loans.
The first difference is the basic nature of the loan itself. Conventional loans are not backed by the government, unlike FHA home loans where the FHA guarantees a portion of the loan to make it more attractive to the lender to issue … (4 comments)
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fha and hud: FHA Loan Questions: Co-Borrowers
- 06/26/16 01:55 AM
A reader asks, "My husband is a co burrower on his mothers mortgage loan and he has been asking her to remove his name from it but she hasnt. The mortgage has affected his credit and has made it hard to get a home of our own. Can his name be removed from the mortgage or is this something we need a lawyer for?"
Before answering this question, let's examine how the FHA defines the role of a co-borrower. Page 128 of HUD 4000.1 states:
"To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their … (2 comments)
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fha and hud: FHA Loan Rules and Individual Lender Standards
- 04/24/16 07:10 AM
A recent question in the comments section reminds us of the need to differentiate between lender standards and FHA loan rules. Both will have a say in loan approval, terms and conditions, and more.
The reader asks, "I was just in bank office today and yesterday. Yesterday before the lender saw my pay stubs i was pre-qualified for 70,000, now after seeing my work hours plus my W2. I'm now approved for only 30,000. How did that happen? I lost 40,000 just by not having 80 hours a week."
There are several issues at work here. The first is the nature of being … (1 comments)
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fha and hud: Ordering a Second FHA Appraisal: The Rules in HUD 4000.1
- 03/02/16 10:38 PM
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 … (2 comments)
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fha and hud: FHA Refinance Loan Types
- 02/23/16 06:09 AM
Do you want to refinance your home loan into an FHA mortgage or refinance an existing FHA mortgage? There are many different types of refinancing options and when HUD 4000.1, the new single family FHA loan rulebook was published in 2015 the entire refinance loan program rules were included in the new volume. That means some policies were updated, some were changed or modified, and some were simply restated.
HUD 4000.1 has a comprehensive list of the different types of FHA refinancing options open to those with single-family mortgages. Let's examine them:
FHA Cash-Out Refinancing
A Cash-Out Refinance is described in HUD 4000.1 as, … (0 comments)
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fha and hud: FHA Mortgage Loan Limits For New Purchase Loans And Refinance Loans
- 01/28/16 09:33 PM
We've gotten some questions recently about FHA mortgage loan amounts, so it seemed like a good time to post the FHA loan rules found in HUD 4000.1 about how maximum loan amounts are calculated.
There are FHA loan guaranty limits and FHA mortgage loan amounts--the two shouldn't be confused as FHA mortgage loan guaranty limits refer to the amount of money the FHA will guarantee for the loan, whereas the maximum loan amount is the highest amount for a specific transaction that the lender/FHA loan rules will allow. FHA loan rules say the maximum can be affected by the type of transaction.
You … (0 comments)
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fha and hud: FHA Loans, Credit Issues, And Down Payment Assistance Programs
- 12/21/15 04:11 AM
A reader got in touch recently to ask about FHA loan credit requirements and down payment assistance programs. That question includes the following:
"...My (FICO) score was about 500 for years till I finally am working with the Lexington Law Firm that Im paying $99 a month that I have 3 negatives I still am owing but I see that now I have my score went up to 648 which is fair but I want to know about the loan."
"Will FHA approves me to get a loan to buy a house in PA. But Im not quite sure about AmeriDream that if … (0 comments)
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fha and hud: FHA Loan FICO Score Requirements: A Reader Question
- 12/04/15 12:54 AM
A reader got in touch with a question in the comments section about FHA loan FICO score requirements, asking, "I have a client that was denied by my lender but has an approval by another. My situation is this.parents are putting $200k down for the purchase. The boys will be qualifying for the $150k balance. Mid FICOS are 600 and 602 and one son has two lates within the last 6 months. My lender said that with a score below 640, they fall into a different category that prohibits any lates in the past 12 months. Can you please clarify?"
Lender standards … (0 comments)
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fha and hud: Know Your Rights: The Fair Housing Act
- 10/08/15 11:20 PM
Recently there was FHA/HUD press release issued, announcing action against a Pennsylvania landlord who allegedly discriminated against families with children in his rental practices. The same kinds of violations of the Fair Housing Act can occur when trying to buy a home, and such cases are important as awareness-raising tools.
When examining these issues, it becomes apparent that many people aren't fully aware of their rights under the Fair Housing Act. Renters, house hunters, landlords and property owners alike are affected by this important federal law. But what ARE the rules under the Fair Housing Act?
You can find a wealth of information … (1 comments)
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fha and hud: FHA Loan Appraisal Rules: The Roof
- 10/04/15 11:33 PM
A recent reader question about FHA appraisal requirements on roof issues had us looking up details on those requirements in the new FHA Single Family loan handbook, HUD 4000.1.
The previous FHA loan rulebooks including HUD 4155.1 and HUD 4155.2 have been superseded by HUD 4000.1, so it seemed like a good idea to post the FHA's current appraisal requirements for the roof since it's one of the most commonly asked-about parts of the home with respect to the FHA appraisal process.
When the FHA appraiser comes to review the property, the roof is one of the areas that must be evaluated. According … (1 comments)
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fha and hud: HUD 4000.1 Takes Effect Monday September 14 2015
- 09/13/15 06:13 AM
Monday September 14, 2015, the new FHA Single Family Home Loan Policy Handbook takes effect. It's called HUD 4000.1 and is now the reference for all FHA single family home loans.
Up to now, certain parts of the handbook have been in effect, while other portions were printed but not effective until today's launch date.
A variety of policies have been superseded by the new guidebook, while others have been reproduced and ported over.
The new Single Family Policy Handbook is broken down into five basic sections, and there is an FHA/HUD FAQ preview page that answers the most common questions about the new … (3 comments)
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fha and hud: FHA Loans And Non-Purchasing Spouses
- 08/23/15 01:03 AM
There are a lot of questions asked about FHA loans and how spouses can buy together. Can the FICO scores of one spouse make up for the lower scores of the other borrower? Can one spouse's income offset the lower income of the other? How does state law factor into FHA loan applications when spouses apply?
All valid questions. But what about circumstances where one spouse is not borrowing? Does an FHA loan require action on the part of a non-borrowing spouse?
The answer can be influenced by state law, lender standards, and FHA loan regulations. At the time of this writing, FHA … (3 comments)
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fha and hud: FHA Loans And Pre-Payment
- 07/31/15 01:29 AM
One of the important selling points of an FHA mortgage loan is the basic differences FHA mortgages have from conventional loans; the lower down payment, more forgiving credit requirements, and a rule that a borrower is able to freely dispose of the property in any way he or she sees fit once the deal is closed and the borrower has taken up residence in the home.
But there's another important difference between some conventional mortgages and FHA loans. Did you know that under the FHA loan program you cannot be penalized or charged for early payoff of the loan?
HUD 4155.2 Chapter Three … (3 comments)
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fha and hud: FHA Loan Employment History Rules
- 07/19/15 08:23 AM
One common topic many borrowers have questions about when they want to apply for FHA loans involves employment history. How long do you have to be on the job with your current employer before you can qualify for an FHA mortgage loan?
Believe it or not, FHA loan rules state that there is no minimum length of time you have to be with your current employers in order to be considered for a loan. According to HUD 4155.1 Chapter Four:
"To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position … (3 comments)
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fha and hud: FHA Home Loan Closing Policies
- 07/11/15 01:30 AM
Did you know that loan rules found in HUD 4155.2 cover specific aspects of the FHA loan closing procedure including taxes, closing costs, and title issues?
Chapter Six of HUD 4155.2 explains these policies. For example, in Chapter Six we learn that the lender is permitted to calculate--and collect--property tax payments under the right circumstances:
"...The lender may project real estate tax payments, and collect those funds as a portion of the monthly escrow account payment without violating the Real Estate Settlement Procedures Act (RESPA). RESPA requires that a borrower receive an initial escrow account statement at settlement or within 45 days of … (1 comments)
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FHA loan rules have requirements for both U.S. residency for potential borrowers, and occupancy for approved borrowers. Did you know that HUD 4000.1 states that an FHA loan applicant does not have to be a U.S. citizen in order to apply for an FHA mortgage or refinance loan?
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