FHA Loan Requirements

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What are the FHA Loan Requirements?

I get a few questions repeated daily.

This question is very high on the list.

I always check my sources before I consult my clients.  There is no better source for answers on HUD guidelines than www.FHA.com

Here is one answered directly from HUD/FHA.

FHA Loan Requirements

Important FHA Guidelines

The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created. Learn more about FHA loan requirements and guidelines.

FHA MORTGAGE INSURANCE

FHA insured loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages.

FHA LOAN LIMITS

FHA lending limits vary based on a variety of housing types and the state and county in which the property is located.

LOAN CHECKLIST

Before you start the loan process, you’ll want to be prepared for the loan application. Have your information organized and ready for your loan officer. Be prepared to pay for a property appraisal and a credit report.

CLOSING COSTS

While FHA defines which closing costs are allowable as charges to the borrower, the specific costs and amounts that are deemed reasonable and customary are determined by each local FHA office.

FHA DEBT RATIOS

In order to prevent homebuyers from getting into a home they cannot afford, FHA guidelines have been set in place requiring borrowers and/or their spouse to qualify according to set debt to income ratios.

FHA CREDIT ISSUES

An FHA loan applicant’s past credit performance that demonstrates good credit history and a solid track record of timely payments will likely be eligible for the mortgage.

FHA TIPS for HOMEOWNERS and HOMEBUYERS

Useful information about FHA refinance loans, new FHA loans, and the guidelines that HUD wants you to follow.

1. About the FHA
   Today the mission of the FHA includes helping borrowers get amounts they qualify for, and assisting lenders by reducing their risk in issuing loans.
2. Credit Problems and a HUD Housing Loan
   If you have had credit problems in the past, the FHA recommends a Consumer Credit Counseling program to avoid being denied an FHA loan.
3. The FHA TOTAL Scorecard
   If you submit FHA paperwork electronically, the FHA TOTAL Scorecard is used to measure the credit risk of all FHA loans submitted through the automatic underwriting system.
4. Applying for an FHA Loan
   The FHA asks for a lot of information on your FHA loan application. You will need to provide the FHA with a wide range of details.
5. Additional Paperwork for Veterans
   The FHA asks that veterans submit the DD Form 214 along with their FHA loan application paperwork. The DD Form 214 is the official record of discharge from the Armed Forces.
6. FHA/HUD Insured Mortgages and Refunds
   If you have an FHA loan or HUD insured mortgage, you may have paid an “up-front” mortgage insurance premium at the closing of your house.
7. Popular FHA Loans
   he 203(b) FHA Fixed Rate Mortgage Loan Program is the widely used FHA home loan, especially among first time home buyers.
8. Where FHA Mortgages Come From
   FHA loans do not come directly from the FHA. The FHA guarantees home loans, reducing the risk to lenders and offering increased borrowing power to qualified applicants.
9. Pre-qualify for an FHA Home Loan
   To pre-qualify for an FHA loan, you should be able to demonstrate employability, job stability and reliability.
10. The Increased FHA Loan Amount
    n early 2006, a HUD press release announced an increase of nearly thirty thousand dollars in FHA-insured home loan money being made available to borrowers for single-family home mortgages.
11. FHA Mortgage Fees
    “Reasonable and customary” mortgage loan fees can include appraisals, inspections, credit reports, document preparation fees and more.
12. Additional FHA Fees
    There are fees included in the processing of some loans that are not directly related to closing costs. Some of these include courier fees, wire fees, real estate broker fees, recording fees and recording taxes.
13. Fees Prohibited by HUD
    Your FHA mortgage is designed to get you into a home for a fair price; you should not pay above and beyond the normal fees associated with buying a home.
14. FHA Loan Mistakes to Avoid
    One major mistake potential homebuyers can make when applying for an FHA home loan is to make a major credit purchase. Don’t cloud your debt-to-income ratio with a big purchase before applying for your loan.
15. Improving Your Credit Score
    If you have a poor credit rating, work to establish payment reliability over a period of at least one year before starting your FHA loan paperwork.
16. FHA Mortgage Insurance
    FHA mortgage insurance protects lenders in case of a default by the borrower of the FHA loan. An FHA mortgage helps reduce the cash needed to purchase a home.
17. Streamline a HUD Loan
    Streamlining your FHA mortgage is particular kind of FHA loan refinancing plan. To qualify, your FHA mortgage must meet certain requirements.
18. Active Duty Military and the FHA Loan
    he Service Members Civil Relief Act passed in the 1940s allows active military people to qualify for an interest rate reduction to a maximum of six percent per year during active duty service.
19. Falling Behind on FHA Loan Payments
    In most circumstances, falling behind on your FHA mortgage requires quick action. Never ignore it. Always act immediately to avoid foreclosure.
20. FHA Insurance Fund
    Some FHA mortgage holders may qualify for help in the form of a one-time payment from the FHA insurance fund, to help bring your FHA mortgage up to date.
21. FHA Connection
    FHA Connection is an online system that allows authorized lenders and FHA business partners to access FHA computer systems to originate loans.
22. FHA Connection Neighborhood Watch
    FHA Connection Neighborhood Watch allows authorized users to monitor FHA mortgage delinquency patterns in a geographic area, by lender or by loan details.
23. FHA Adjustable Rate Mortgage
    When shopping for an FHA home, the FHA adjustable rate loan for your FHA home means you should do some homework about the index, which is the measurement of how the interest rate changes.
24. How Mortgage Limits are Set
    The FHA does set limits on FHA mortgage loans, and they may differ by county and state. FHA mortgage loan limits are based upon the Fannie Mae/Freddie Mac limits on conventional mortgage loans.
25. FHA Loan Limit
    FHA loan limits can change based on factors including average area home prices. FHA loan limits also increase with the number of units.
26. FHA Loan Options
    FHA home mortgages can include FHA loans for a “fixer-upper” home. The FHA loan for fixer-upper property combines the purchase price of the house and the cost of repairs.
27. Energy Efficient HUD Mortgage
    The FHA EEM allows you to borrow additional money to incorporate energy saving features into your new home. To qualify for the FHA EEM, you’ll need to meet some FHA loan guidelines.
28. Mobile Home Loans
    You may qualify for FHA-insured financing for either mobile homes or factory built houses. FHA loans for mobile homes located in mobile home parks are separate from the FHA loans for people who own the land where the mobile home would be located.
29. Refinancing on FHA Loans
    The FHA does allow refinancing on an FHA loan. Lenders are permitted to include the closing costs into the new mortgage, as long as there is enough equity in the property.
30. Advantages to HUD Refinancing
    Refinancing your FHA home can be profitable. An FHA refinance can give lower your monthly payment, and allow you to pay less interest. An FHA refinance can be used to convert a thirty-year FHA mortgage to a fifteen-year mortgage, building equity in your home faster.
31. Cash Out Refinance FHA Loans
    According to FHA loan guidelines, you may be eligible for an FHA “reverse mortgage” which allows you to convert part of the equity in the home into cash.
32. Requirements for the FHA Reverse Mortgage
    FHA loan guidelines require the borrower to have already paid off the home or owe very little in order to get an FHA reverse mortgage.
33. Eligibility for the FHA Reverse Mortgage
    FHA guidelines do not require you to have an FHA mortgage currently in order to qualify for the FHA reverse mortgage. Your new mortgage will be an FHA insured loan, regardless of the status of the prior loan.
34. New HUD Developments
    If it’s been more than a year since you last looked into an FHA loan, FHA mortgage or FHA reverse mortgage, check to see what new developments have occurred since last time.
35. FHA Becomes Better
    Do a little research and you’ll find that HUD and the FHA have always changed for the better. The FHA constantly evolves to serve potential homebuyers best.
36. Descrimination in Lending
    The Fair Housing Act, FHA regulations, and FHA loan guidelines forbid discrimination in lending. Discrimination can include denying a loan or home sale based on racial criteria.
37. Pre-Forclosure Sale
    The FHA offers homeowners a chance to avoid foreclosure and make good on their FHA mortgages in delinquent status.
38. FHA Appraisal Requirements
    All housing appraisals required by FHA guidelines must be performed by appraisers on the FHA roster. The appraisal is a very important part of meeting FHA requirements and it’s best to schedule it as early as possible.
39. The Need for an Appraisal
    FHA loans are intended for homes that meet safety and financial standards. The FHA has rules in place to prevent substandard housing from being passed on to FHA mortgage seekers.
40. Watch Out for Housing Scams
    When selling your home, scammers may approach you offering “help.” They may offer to pay off your FHA mortgage or promise you money after the house is sold.
41. Last Resort Deed-in-lieu-of-Foreclosure
    For those in more serious situations in danger of a foreclosure, there is a way to give the property back to the bank. The FHA home can revert to the bank.
42. FHA Support Options
    In the FHA mortgage process, your lender will work to help you provided you can demonstrate a legitimate need and a desire to be financially responsible.
43. Avoiding Predatory Lenders
    Follow some good FHA home loan/HUD advice. Never sign any document you don’t understand. Ask for a complete explanation of all terms and conditions.
44. Your Right to Choose the Best Mortgage
    The FHA wants you get the loan amount you are qualified for and sets up conditions to allow you to successfully buy an FHA home.
45. Borrow What You Can Repay
    If you begin the process of buying an FHA home only to realize you can’t really afford the payments, immediately discuss the situation with a housing counselor and your lender.
46. Detecting Disreputable Lending Practices
    FHA guidelines are very clear about above-board lending practices that help you get into an FHA mortgage. Still, you may encounter individuals who don’t adhere to FHA rules.