Ready To Apply for an FHA Loan?
January 27, 2023
Believe it or not, knowing what type of home loan you need is an important step. Borrowers who want to buy a condo unit, for example, will find the FHA loan process to be a bit different from the one needed to buy a manufactured home, fixer-upper, or other properties.
Those who have some experience buying homes know that is some fairly Home Loans 101-type advice. What’s not so obvious? Knowing the differences between types of home loans and their uses. For example, you don’t apply for the same type of loan to buy a suburban house as you do a fixer-upper. What kind of FHA loan is right for your specific transaction?
FHA Condo Loans
Those who want to buy condo units should know those properties should typically be located in a condo project that is on (or can be added to) a list of FHA-approved condominium projects. That said, some borrowers do NOT know there may be certain exceptions. A condo unit in an “unapproved” project MAY be approved for an FHA mortgage if it can meet the FHA criteria for approval as an exception.
FHA Manufactured Home Loans
Are you looking at buying a manufactured home? FHA loan rules may require the home to be delivered straight from the manufacturer to the lot it will be situated upon and you will be required to have the home permanently installed on an approved foundation.
FHA Construction Loans
Borrowers who don’t want existing construction may consider building a house from the ground up with an FHA One-Time Close construction loan. If this is an option you are thinking of, be sure to research the need for extra funds--money you may need more time to save.
Why? In addition to the minimum 3.5% down payment, your closing costs, and other funds set aside for the loan, consider saving an emergency reserve or contingency reserve for unexpected costs during construction.
FHA Rehab Loans
And what about those in need of an FHA 203(k) Rehabilitation Mortgage? If you are buying a fixer-upper, consider whether to apply for additional loan funds through the FHA Energy Efficient Mortgage add-on. This gives you more loan funds specifically to be used for approved energy-saving improvements to the property.
Refinancing Inherited Homes
Are you trying to refinance an inherited home? If you apply for FHA refinancing on such a home, know that the status of the property makes a big difference.
FHA loans for inherited homes include a rule which states that if you rented out the property you won’t be eligible for an FHA Cash-Out Refinance loan until you have lived in the inherited home for 12 months or more. If you did NOT rent the home out to others in this way, you may not have a prior occupancy requirement to deal with.
Ask a loan officer about any of these issues if you have questions ahead of your home loan application. Remember that state law and lender standards may also apply where these loan rules are concerned; FHA requirements are not the only rules that may apply.
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FHA Loan Articles
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June 15, 2023When you buy a home with an FHA mortgage, cash for closing costs and your down payment is required. It would be easy to assume you simply give the lender cash in the specified amount and that’s the end of the story.
May 20, 2023Did you know there is an FHA loan option that lets you build a house from the ground up? You can use this mortgage to build on land you own or on land you buy as part of the loan. But you will want to address some issues comparing construction loan options.
May 3, 2023Sometimes when buying a home there may be a question of surplus or excess land. You likely won’t face this issue when buying a condo unit, but for other types of purchases, this may be an important factor in the appraisal process.
April 18, 2023Your lender is required to make sure you can realistically afford your mortgage, and that means verifying that your income is stable, reliable, and will continue after your mortgage has closed. What some don’t realize about this process is that there are standards for verifying income.
