FHA Underwriting Guidelines

Why A FHA Reverse Mortgage Could Be Your Best Option

A FHA reverse mortgage is a US government backed and insured program that allows seniors to receive money from the equity that is tied up in their home. There are two other programs available, Home Keeper and Jumbo, but over 90% of seniors chose the FHA program. Chances are if you're over 62, live in an averagely priced home and want peace of mind, the FHA program is the way to go.

Reverse mortgages are becoming increasingly popular as an aging population is finding that retirement can be improved with additional funds. This can be for all sorts of reasons; health care costs, vacations, and buying shares to name but a few.

Unlike a traditional forward mortgage, a lender agrees to hand over an agreed amount over to a borrower - usually as fixed monthly payments - on the understanding that the loan is not payable until the borrower no longer lives in the home. There are no monthly payments and the title deeds remain in the homeowners hands at all times.

An important point to remember is that the home does not have to be sold in order to pay back the loan. The loan can be paid back from any source of funds, whether by selling shares to raise the money or by getting a normal mortgage on the property etc.

To be eligible the borrower(s) must be over 62. If one of the co-owners is under 62 then, in order to get this type of loan, they must sign a quitclaim deed conveying the title to the over-62 co-owner. Also, the property must have no or very little mortgage remaining on it. Finally, the property must be a single-family dwelling, an FDA-approved condominium, or a manufactured house located on an owned lot. Properties that are ineligible include holiday homes, trailer homes, and commercial property.

The amount that can be borrowed is calculated using the value of the home's equity, its location, current interest rate and age of the owner. Generally, the more valuable the home and the older the homeowner the more that can be borrowed. However, the maximum amount that can be borrowed is capped.

Payment can be received in 5 ways; Tenure - equal monthly payments for as long as the borrower lives in the home. Term - equal monthly payments for a fixed period of time. Line of Credit (not available in Texas) - variable amounts that can be withdrawn until the line of credit is exhausted. Modified Tenure - a combination of line of credit and equal monthly payments for as long as the owner lives in the home. Modified Term - a combination of line of credit and equal monthly payments for a specified period of time.

A FHA reverse mortgage is federally insured. This guarantees that the borrower will always receive the agreed amount no matter what. There is an upfront insurance premium of 2% of the value of the home with an additional annual premium of 0.5% of the home's value.

The money received is tax free and does not affect Social Security or Medicare benefits.

Finally, he borrower is required to attend counseling from an independent third party who will talk and advise as to whether the FHA reverse mortgage is the best option.

Author: Robin OBrien

FHA Loans Look Strong

We take long-term mortgages for granted today, but it wasn't always that way. Long ago it was likely that if you financed a home you borrowed money with a five-year "term" mortgage -- and even then you needed 50 percent down. When the five years was up, you went and got a replacement loan.

But term loans have a built-in problem: They're not always available, especially if people lose jobs or if home values decline. That was a common situation after the Great Depression, but in 1934 the newly-formed Federal Housing Administration (FHA) began offering long-term mortgage loans insured by the federal government. The result was that millions of people could get long-term mortgages with little down that would allow them to ride-out tough times.

Today the FHA mortgage program remains an important option -- more than 555,000 FHA loans were originated in 2005. That's a big number, but it's a lot less that the 827,000 FHA loans started in 2004 or the 1.53 million originated in 2003.

Whatever the numbers, if you're a first-time buyer or someone looking for liberal qualification standards, the FHA program is worth considering. And given coming changes in the lending industry, it's likely that we'll see a lot more FHA loans in 2006 and beyond.

Under the FHA program you can buy with as little as 3 percent down. That's 97-percent financing, a good deal by traditional standards though it's fair to point out that 100-percent financing is now widely available. However, the 3-percent downpayment can be in the form of a gift or grant -- in fact for the past decade the FHA has even allowed couples to establish a "bridal registry" where friends and relatives can contribute to a downpayment fund.

In addition, the FHA program also allows owners to kick-in a "seller contribution" of 1 percent to as much as 6 percent of the sale amount. While you can bet that most sellers will not joyously give up money to help purchasers, in a buyer's market a seller's contribution might be the difference between "sold" and stilled listed.

To qualify for a mortgage lenders look at your monthly income and expenses. For a conventional loan the guidelines might allow you to spend 28 percent of your gross monthly income on housing costs such as mortgage interest, principal, property taxes and home insurance (PITI). In addition, loan guidelines might allow you to spend 36 percent on PITI plus other monthly debts such as credit card bills and auto loan payments.

With FHA fixed-rate financing the usual ratios are 31/43 -- liberal standards that will allow borrowers to get more financing than with conventional loans. FHA also offers an "energy efficient mortgage" or EEM. If you have an energy-efficient home the FHA believes you'll have lower utility costs so there's more money in the till each month for mortgage payments. The FHA guidelines allow for 33/45 ratios with EEM financing.

There are, however, some complications with FHA mortgage financing. Under the FHA program you're buying with little down. This is possible because FHA insures the loan and you pay an insurance premium. The premium is equal to 1.5 percent of the sale price at closing (an amount which can be financed) and .5 percent per year for the outstanding loan balance. In other words, if you can buy with 20 percent down or with 80-10-10 financing you may want to skip the FHA program and avoid the insurance fees.

FHA also has a complex set of loans limits which means there may not be enough loan money to buy a property.

For instance, this year the conventional loan limit for single-family homes in the continental U.S. is $417,000. By law, the maximum FHA mortgage is 87 percent of the conventional loan limit, or $362,790 in 2006. However, this upper loan figure is only available in high-cost areas -- and in many high-costs areas FHA loans are simply insufficient to acquire typical homes.

If you live in a community with less expensive housing it's likely that the amount you can borrow under the FHA program will be lower. Larger FHA loans are available for two-, three- and four-unit properties, providing at least one unit is owner-occupied. Your mortgage lender can explain the amount of FHA financing available in your community for the type of property you want to purchase.

For the past few years there has been another factor which has made FHA loans less attractive than some other forms of financing, a factor which may go far to explain the loan's declining popularity.

Beginning in 1998, the FHA started something called the Homebuyer Protection Plan. The idea was to have appraisers examine homes for physical defects -- not a bad thought except that appraisers are qualified as not professional home inspectors.

Many homeowners thought they might save money because an FHA appraisal under the so-called protection plan sure sounded like a home inspection. It wasn't, but as a result many buyers decided not to get their property checked by a professional inspector.

HUD said that FHA appraisers who did not meet its requirements could be prosecuted under the federal False Claims Act. The appraisers then did what sensible people do: They raised their rates because of the new requirements or refused to appraise homes for FHA borrowers. Lenders, in turn, began advising borrowers to try other programs if only because it was easier to find an appraiser.

The HUD effort was not adopted by conventional lenders or the Department of Veterans Affairs. And one home approved for FHA financing in Detroit was found to have 181 building code violations -- perhaps not a world record but so embarrassing that HUD bought back the property from the owners.

On December 19th last year, HUD announced that appraisers would no longer be responsible for reporting "cosmetic defects, minor defects or normal wear and tear" including such things as leaky faucets, soiled carpeting, poor workmanship or trash in the crawl space.

What the new HUD appraisal standards really mean is this: If you want to buy a home with FHA financing, that's great -- just make sure you get both an appraisal and a professional home inspection. The appraiser can establish the value of the property and the inspector will check the property to determine its current physical condition.

This is as it should be for all homes and all forms of financing. An appraisal is simply not a home inspection and buyers are well-served getting both.

As to FHA loans, without needless and sticky appraisal standards you'll see more of them in 2006. An inherently good loan is once-again available to borrowers on increasingly-competitive terms.

Author: Peter Miller

FHA Reform

The high number of foreclosures, the demise of several large subprime lenders, the clampdown on lending to people with less than perfect credit, the fight against predatory lending practices and fraud, and the vast numbers of Adjustable Rate mortgages (ARMs) that have become unaffordable has created a situation where many fewer people qualify to purchase a home or to refinance an existing loan. There is a growing pent up demand for affordable mortgages especially among first time buyers and homeowners whose monthly payments have become too costly. This situation has had a dramatic effect on real estate sales throughout the country.

The Expanding American Homeownership Act, which is also known as FHA Reform, was introduced in the 109th Congress in 2006, and is awaiting reintroduction in the House of Representatives. When enacted, the bill will enable HUD to reach more potential borrowers and allow millions more low- and moderate-income families to achieve the goal of home ownership.

Features of this legislation will include:

1. There will no longer be a  minimum 3% down payment which will mean less cash needed at closing.

2. The FHA maximum loan amounts will become significantly higher, meaning that many more homes and people will qualify.

3. 40 year mortgages will become a reality.

4. Condominiums will be much easier to finance with FHA loan insurance.

5. Perfect credit scores won't be required to qualify for a loan. This is a huge benefit in the current market!

6. More senior citizens will be able to get reverse mortgages using FHA loan insurance.

All of this and more is under consideration in Congress. The House overwhelmingly passed their version of the Act and as of this writing (10-07) the Senate has sent a version of the bill back to the House. Once all of the provisions are ironed out and agreed upon by Congress, the President is expected to sign it into law and the stage will be set.

FHA-insured loans were once a very significant part of the market but FHA market share has declined in recent years. This was due in part to the emergence of many subprime lenders offering attractive alternatives to borrowers and agents. I believe it was also due to the relatively harsh climate for lenders, appraisers, and real estate agents in the form of severe property condition requirements and a variety of punitive measures for market participants who failed (or were perceived to have failed) a large number of minimum standards set by HUD. In short, it because quite hard for a less-than-perfect home to qualify and too many lenders and agents became annoyed with or simply afraid to deal with FHA loans. Much has changed however, even prior to the new reform legislation. For one thing FHA repealed a lot of its property requirements in 2005. The standards for a home have become more in line with Conventional underwriting standards. FHA also eliminated a cumbersome set of forms that lenders and appraisers were required to submit.

The new FHA Reform legislation will take FHA to the next level and should go far toward restoring FHAs place as the standard bearer for mortgage lending to the little guy and will do a lot to fill the void left by the now defunct subprime lenders. But it will also open up access to upper middle class borrowers as well. This will mean a lot of new business for the stable lenders that have remained, and there is a real opportunity for out of state lenders to do a lot of business across the country. But there is a small problem in that a lender looking for an FHA-approved appraiser in another area may have difficulty finding contact names and contact information for them.

HUD maintains a page on its website where anyone can search for appraisers by name, location, zip code, etc. The primary problem with this is that the results returned do not provide any other means of contact other than the address of the appraiser. No phone numbers, email addresses, or web site information. Lenders working on a significant number of loans simply do not have the time to chase down this information for a large number of non-local appraisers. There are a lot of appraiser directories out there that do contain contact information for FHA appraisers, but not every lender knows where these directories are or which ones to use. The problem is compounded by the fact that many of these directories are very costly for appraisers to join. A simple low cost solution is needed that lenders can easily find and that FHA appraisers can easily afford to join.

Author: Harry E. Davis

The Housing Market Has Left Fewer Loan Options, Find Out More About Government Backed FHA Mortgages

The housing meltdown and credit crunch have greatly impacted the mortgage industry. Sub prime loans are all but a thing of the past. The government is likely to step up efforts to help the mortgage and real estate industry by improving the government backed fha mortgage programs. The federal housing administration (FHA) has been in existence for over 50 years and was one of the first government programs designed to help boost the housing industry. The role of the federal housing administration with mortgage loans is to provide insurance to a lender when a borrower follows specific guidelines set forth by the fha for a mortgage program.

It is important to note that federal housing administration does not set the standard interest rates charged to borrowers for fha mortgages. Fha mortgage rates are determined similar to every other mortgage rate, they are a bi product of the open market. Mortgage lenders determine interest rates by the supply/demand for mortgage backed bond securities, and this is how fha loan rates are priced as well.

Fha mortgage programs are available for both home purchasing and refinancing. They were often considered a popular option for first time home buyers to get into their first home as they have very minimal down payment requirements. If a borrowers is purchasing a home via fha they only are required to provide a down payment of 3%, all of which can be in the form of a gift. Fha also allows home buyers to qualify if they have non traditional methods of credit verification, such as utility bills, cell phone payments, etc. If a homeowner already owns a home and would like to try to refinance with an fha loan they may be eligible to cash out up to 95% of their homes value.

Fha loans can be a great tool for homeowners who are trying to survive the credit crunch. It is important to know that fha loans have dollar limitations based on geographic counties, require that you pay mortgage insurance for the entire loan term (regardless of your loan to value) and are not offered by every lender or bank. Fha mortgages are traditionally available for terms of 15 and 30 years, and most fha loan programs have a fixed rate for the entire loan term.

If you would like  more information on Fha mortgages or research options on home refinancing visit LoanNetwork.com

Author: Oliver Kyle

How To Buy A Home Even If You Don't Qualify For A Conventional Loan!

Is this the question that you are constantly asking yourself? How can I buy a home even if I don’t qualify for a sub-prime loan? What if I told you that you still could buy a home even when you get turned down for a home loan. I bet you are kind of scratching your head right now... How is that possible? How can I get in a home even when I don’t qualify for conventional financing?

Well here are a few answers:
1. You will have to be creative in your offer to the seller.
2. You need seller’s who has a need to sell: Relocating, etc
3. You need sellers who are open minded to listening to another way of getting there property sold.

So why no one every told me that there was a different way? Well because a lot of people don’t know how to think differently. I was talking with a group the other day and it seem like they where saying that if a new pair of jeans come out and it becomes stylish then we all tend to buy them based on the crowd. It’s the same way as buying a home. We have become so use to hearing lenders say no until after the third no we usually give up. What I want you to do is snap out of it! Stop allowing the no's to keep you from moving forward in trying to purchase a home. I've learned that you have to get pass the no's to get to a YES..... Just like right now you are ready to buy your next home and your lender has turned you down..... Here is the question to ask your lender:

1.” If I don’t qualify for 100% financing what amount do I qualify for? Do you qualify for a 95% loan or do you qualify for 90% loan or do you qualify for a 85%..... Find out what you can qualify for....

2. If you find out that your credit is below the minimum credit score then what other strategies are there?

(A.) You can ask that seller can you rent there home for at least 12 months to 2 years and have an option to buy the home.
(Note: Within this period you need to make sure that you are re-establishing credit and doing debt settlement with some creditors that want come off of your credit report. )

(B.) You can ask the seller will they owner finance there home to you with a little money down.. This amount can be 3% or more down.... What does this do for you? It helps you to qualify because you are not dealing with conventional financing guidelines.

(C.) You can check out FHA guidelines to see if you qualify for FHA financing.

Did you know that

FHA has come out with new guidelines? Look below to see some of the following things.

No minimum FICO score- FHA allows “common-sense” decisions.

Maximum loan amount for Dallas, Kaufman, Collin, Denton, Rockwall and Hunt Counties is $200,160 (Sales price of 204,760 with the 2.25 down payment)

Minimum Down Payment is 2.250%, but can roll in all cost with  $0 out of pocket.

Buyer must make a 3% investment unless down payment is paid as a Grant/Charity (DAP) contribution.

Seller can contribute up to 6% of the Sales Price without using a Charity (DAP) contribution.

No Termite Inspection Required.

No Non-Allowables required for the seller.

Buyer can currently be in a Chapter 13 Bankruptcy.

It is an assumable loan (important when rates go to 8% and they are at 6%).

Buyer can have Federal Tax Liens and not have to pay them off!

(D.) Did you know that if you serviced in the USA army, Airforce, Marines or Etc you may qualify for a VA loan... Just look below at some of the guidelines:

NO Minimum FICO score is required*
There is NO down payment required!
Seller can pay any/all of reasonable buyer’s closing cost!
Buyer CAN currently be in chapter 13 BANKRUPTCY*
Sales Price can go up to $417,000*
Can have unpaid collections
Can go as low as an 4.20 Fixed Rate if used in conjunction with a Texas Veterans Land Board program.*
*Some limitations apply
(Note: Above information on FHA and VA loans where provided by one of my loan officers: Linda  Davidson. If you would like to receive her information feel free to contact me....)

The above information lets you know that yes you still can buy a home. You might have a things to do list. But, don’t you think it would be worth giving it a try? So don't give up. Keep your goals before you and like the old saying: "If first you don’t succeed, then try, try again." Don't give up on the dream of home ownership. You can have a home too!

Your Next Action Plan:
1. Find a Realtor and Lender that understands FHA and VA guidelines. Also find out what you can qualify for.
2. Get your credit report and see what things need to be settled and what things can be taken off.
3. Find sellers who will agree to terms of allowing you to rent and then give you an option to buy.
4. Talk with Sellers and see if they will Owner Finance there home.

Author: Calvin Wright

FHA Reform May Change It's True Purpose

Expanding American Homeownership Act of 2007 has been passed by the House and will most likely be passed by the Senate and signed by the President after a few minor adjustments. This is the biggest change to FHA that has occurred since it inception. If the House has it's way, this would actually change the initial purpose of FHA from being an agency formed to help low income households to an agency that helps almost all Americans to be able to own and keep their homes.

Increasing FHA Loan Limits

Why am I saying this? FHA has always been geared toward helping low income, poor areas, to be able to afford buying houses. The new bill that is now before the senate proposes to increase the loan limits from $200,000-$350,000 to as high as $700,000 in areas with high median house prices. I personally don't know any low income people that own $700k houses, except for those individuals that lied on their loan applications and "stated" that they made $10,000 per month as a janitor at Wal Mart and actually got the loan. Fortunately, Bush has stated that he will not allow this to happen. He intends to keep FHA's purpose intact. I believe the Senate will do the same. Bush plans on keeping the FHA loan limit at $417,000 or below. We should see very soon.

Elimination of Audited Financials Requirement for Brokers

This is the second largest change to FHA. If this is passed by the House, it would open the door to about 90% of the nations mortgage brokers that were previously restricted from becoming an FHA Approved Broker (Loan Correspondent) due to the cost barrier. Most people don't realize it, but audited financials can cost between $2,000 to $20,000 for the average small broker to obtain. The audited financials required by FHA must be completed by a CPA that has gone through a peer review and the minimum net worth must be $50,000 according to FHA's stringent net worth calculation guidelines. Now, the 90% of brokers that did not have the time, money, and resources to put together audited financials, can put forth a surety bond in lieu of the audited financials. A surety bond is obtained through insurance companies and covers the consumer or third parties in a transaction and is payable by the mortgage company if drawn on by the state to pay a consumer or third party. The new bill proposes a bond between $50,000 and $100,000. Most analysts would agree that something similar to this will be in the amended bill when passed by the Senate.

What will be the affect of this Bill

Whether the FHA loan limit is increased to $700,000 in some areas or $417,000, the bill will change FHA's purpose dramatically. Many people will be looking to FHA as a place to obtain a loan that conventional lenders are not able to provide. This is possible through FHA's upfront mortgage insurance that is able to reduce the risk of higher debt-to-income and loan-to-value ratios. We will also see a huge surge of advertising for FHA when the majority of mortgage brokers are given access to be approved FHA brokers. Unfortunately, the House tends to think that this will be the solution to the current market problems. This is a great start, but I think it will take much more than this to bring an adjustment to all of the lies and deception that occured in the last 5 years in the mortgage industry.

Steven Sheasby, founder of Integrity Mortgage Licensing, has worked with numerous mortgage companies with licensing across the country. He has managed multiple compliance departments for nationwide lenders and brokers. His experience in mortgage licensing and other mortgage regulatory compliance issues has given him the inside track for dealing with the states without the expensive cost of an attorney. Contact Integrity Mortgage Licensing at 714-721-3963 or ssheasby@integritymortgagelicensing.com.  Visit his website at http://www.integritymortgagelicensing.com

Article Source: http://EzineArticles.com/?expert=Steven_Sheasby

Connecticut Home Mortgage - FHA Mortgages Are the Future

Attention to all Connecticut homeowners. You simply must refinance your adjustable mortgage into low FHA mortgage rate. The FHA guidelines have recently changed to provide major benefits for Connecticut home mortgages. The new changes are long overdue and will allow you to refinance your risky Connecticut adjustable rate mortgages into a low FHA mortgage rate.

There are several specific rules that you must be aware of if you are considering refinancing your Connecticut home mortgage.

The changes are as follows:

1. The program is temporary and only available until December 31st, 2008.
2. Your current mortgage must be a non-FHA adjustable mortgage that has already reset (means payment has increased).
3. If you have fallen behind on your mortgage due to the increase in the payment since it started adjusting you may still qualify.
4. Your mortgage payment must reflect 6 month's prior to your mortgage payment changing you had on-time mortgage payment history.
5. If there is sufficient equity in the home FHA may still insure mortgages that include missed mortgage payments.
6. If the loan amount that you need exceeds FHA mortgage amount limits or LTV limits then you may qualify for a second mortgage.
7. It must be a owner-occupied property.

The main reason for this change is due to Connecticut mortgage lenders that gave Connecticut adjustable rate mortgages with low introductory interest rates and payments that have recently reset and increased. Reset means that the rate and monthly payment has adjusted upward based on a number of factors determined by a group of banks or lending institutions.

With a low FHA mortgage loan you can have a FHA loan rate in addition to FHA refinancing assistance if you have a circumstance that contributes to your late payments. You no longer have to take the risk of refinancing with a unstable lender when you can take advantage of a FHA government home loan that will give you the stability and monthly savings you need.

Author: Chris Rivers

Chapter 13 Refinance Mortgage Loan

The Chapter 13 bankruptcy loan is a changing but still available product offering from many wholesale lenders. Since August 2007 the secondary mortgage markets have been extremely volitile pushing many lenders to cut cut off funding for debtors with spotty payment history. Two or more 30 day lates on a mortgage or trustee report since your Chapter 13 file date has procluded many debtors from seeking relief from many so called "subprime" lenders.These subprime lenders that are still in business as of this article are funding Chapter 13 loans with the same/similar guidelines as FHA, but charging much higher interest rates than the FHA product.

The only good reason at this point to use a "subprime" lender to buyout a chapter 13 is if your loan amount is non-conforming to FHA loan limits* Please note that the FHA loan limits are to be raised pending the implementation of the FHA secure program. Check the HUD.gov site for loan limits in your county/State*. Many mortgage brokers are trying to steer customers into harms way because of their own ignorance or lack of a license to do FHA loans. Always ask your broker if they are an FHA approved lender/broker. FHA was designed to help the subprime borrower. The only limitation on FHA is you cant lie about your income, and you cant borrow over the median sales price of house in your county. LTV restriction almost save the borrowers from themselves naver on a BK buyout will the LTV be over 85% which preserves equity.

The FHA loan has taken the place of the predatory practices that were common from many subprime lenders. Many brokers have misconception about bankruptcy refinancing and FHA loans I.E. The debtor must have been in an FHA mortgage prior to bankruptcy, to refinance with FHA out of the bankruptcy. This is completely untrue! The debtor can even leave a bankruptcy open with FHA with the appropriate motion from the court! Many people dont realize the power of FHA lending. Work with an FHA lender and an obvious expert.

Please visit http://www.bankruptcyhomeloan.org for more info! See why Mr. Peck is funding loans while other loan officers are funding career changes. Work with a  chapter 13 mortgage specialist and get it done right the first time!

Author: Shawn M Peck

GA Manufactured Home Refinance - Government Insured FHA Mortgages For Manufactured Homes

Purchasers of manufactured homes often use short term financing from a bank (for example, a five year balloon note) or short term, very high interest rate owner financing to cover the cost of setting up their new home.

Since each of these methods of financing the manufactured home must be paid off in a short period of time, owners of manufactured homes should begin looking for replacement financing as early as the end of the first year of ownership. Only at the end of the first year can the loan can be based on the appraised value of the home instead of its original sales price.

Although FHA has fairly stringent property guidelines for manufactured homes, a loan officer experienced in this area can guide borrowers through the effort with no more hassle than a traditional mortgage. The major advantage of an FHA loan for this purpose is that an FHA loan provides the best chance to take advantage of today's low mortgage rates rather than having to use higher conventional rates with manufactured home rate add-ons. An FHA loan for a manufactured home has all the same attributes as any other FHA loan, including the option for streamline refinances later should interest rates go down. If the property meets the requirements, the loan is processed exactly like an ordinary FHA loan.

If you have a manufactured home that you need to refinance, the first step is to check the side of the house for a set of HUD tags which indicate that the home was built according to HUD standards. In order to qualify for FHA financing, this tag must be attached to the property, or you will have to pay to have the tag number researched.

Once you know the home was built according to HUDs building code, the next step is to verify that the foundation was installed according to HUDs detailed guidelines. In order to do this, you must hire a structural engineer to inspect the foundation. The cost for this can be added into your new mortgage.

Whether you have good credit and a balloon note at the bank, while your property value is not high enough to qualify for a conventional 30 year fixed rate mortgage, or you have had some credit problems and are stuck with high interest rate owner financing, FHA may have a solution for you.

Author: Carl Pruitt

100 Percent Mortgage Financing - Qualifying for a FHA Loan

If looking for a no money down or 100 percent mortgage financing, you have several options. Understandably, many homebuyers have little cash on hand for a down payment. Because of the increase in home prices, saving the typical 20% is practically impossible. Fortunately, FHA home loan programs offer 100 percent mortgage financing, which eliminates the need for a large down payment. Here are a few tips on qualifying for a FHA home mortgage loan.

Employment Guideline for Getting a FHA Mortgage Loan

FHA loans are very flexible. Still, before approving a homebuyer for a FHA loan, the lender will carefully review several factors to determine whether they are an ideal candidate for a mortgage loan.

To acquire a FHA loan, lenders require steady employment. Usually, this involves two years of continuously working. It helps to maintain the same employer throughout the two years.

Individuals who change employers every four to six months or those who only held employment for half of the 24 months may have a hard time getting approved for a FHA loan. If unemployment was due to layoffs, illness, or other legitimate excuses, the lender may consider the applicant for approval.

Credit Guidelines for FHA Loans

When reviewing a homebuyer's application for a mortgage loan, the lender will look at all credit activity that has occurred within the last two to three years. Concerning late payments, applicants cannot have more than two 30 days late payments within a two year period.

Bankruptcies must have a discharged date of at least two years. Furthermore, foreclosures must be at least three years old. In both cases, mortgage lenders require that homebuyers have begun re-establishing credit and building a good credit history.

Income Guidelines for FHA Loans

To qualify for a FHA mortgage loan, lenders will evaluate combine household incomes and other consumer debts (auto loan, credit cards, student loans, etc) to ensure that the mortgage payment does not exceed 30% of income. However, FHA loan lenders are flexible in this regards. Because of rising home prices and modest incomes, lenders may approve loans that exceed 30% of the homebuyer's income.

Author: L. Sampson