What to Know About the FHA Handbook
September 19, 2023
The FHA Handbook outlines the policies and requirements for FHA-insured mortgages, which are popular among first-time homebuyers and borrowers with lower credit scores or smaller down payments. It provides detailed instructions and guidelines on various aspects of the FHA loan program, including eligibility criteria, underwriting standards, property appraisal requirements, and mortgage insurance.
Key components covered in the FHA Handbook include:
Eligibility Requirements
The handbook explains who is eligible for an FHA loan, including minimum credit score requirements, debt-to-income ratios, and down payment guidelines.
Property Standards
It describes the property requirements that must be met for a home to qualify for FHA financing. This includes guidelines for the condition and safety of the property.
Appraisal Guidelines
The FHA Handbook outlines the specific requirements for property appraisals, ensuring that the property's value is accurately determined.
Credit Underwriting
It provides guidance on how lenders should assess the creditworthiness of FHA loan applicants, including requirements for handling credit issues and disputes.
Mortgage Insurance
Details on FHA mortgage insurance premiums, including both upfront and annual premiums, are included.
Closing and Settlement Costs
Information on allowable and non-allowable fees and costs for the borrower, as well as the seller's contributions.
Loan Origination and Processing
Guidelines for the processing of FHA loan applications, including required documentation and borrower verification.
Servicing and Loss Mitigation
Information on loan servicing requirements and how to handle delinquencies and foreclosures.
The FHA Handbook is periodically updated to reflect changes in FHA policies and industry best practices. Lenders and other professionals involved in FHA lending are required to adhere to the guidelines outlined in the handbook to ensure that loans meet FHA standards and qualify for FHA insurance.
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