Legal Sources of Funds; FHA Purchase to $800,000

I received the following questions from a very seasoned real estate agent the other week: “I have a 3.5% down offer for $795,000 on my desk – A. Does FHA even go that high; and B. What are the legal sources of funds for a down payment and closing costs?” MAX FHA LOAN AMOUNTS In […]Read More

No Bubble Here; FHA Condo Spot Approvals

FHA CONDO SPOT APPROVALS ARE BACK STARTING TOMORROW Starting tomorrow, an entire condominium complex will no longer need to be “FHA Approved” for a buyer to use FHA financing to purchase a unit within the complex. Buyers can now obtain what is called a “Spot Approval” to get just get a single unit “FHA approved.” […]Read More

FHA: “Condo Complexes No Longer Have to Be FHA Approved” – Spot Approvals Return!

About ten years ago “FHA Spot Approvals” went the way of the dodo bird, in that they disappeared. This was devastating to a lot of FHA buyers b/c condos were all that they could afford in their markets and so many condo complexes are NOT FHA approved. Fortunately, however, HUD/FHA will again allow for “Spot […]Read More

Why FHA’s BETTER Than Conventional In Hot Markets

My wife Heejin was “on call” for weekend referrals yesterday, and she had two buyers who wanted to switch from FHA financing to 5% down conventional financing. The buyers were making offers over list price in very competitive markets, and they were convinced their offers would be stronger with conventional financing. And Heejin screamed,“NOOOOOO, DON’T […]Read More

Both VA and FHA Require Formal Condo Approvals; Alternatives

Most agents and borrowers know that condo complexes need to be “FHA approved” before a unit within the complex can be purchased with FHA financing. What many don’t know, however, is that VA has the same requirement. VA and FHA do not unfortunately maintain the same list of approved condo complexes. You can find FHA’s […]Read More

First Time Homebuyer Program Limitations; First Time Homebuyer Programs = FHA

Our first time homebuyers almost always ask about special financing programs for first time homebuyers. With the exception of a few down payment assistance programs and city-specific programs, there are no effective first time buyer programs other than good old fashioned FHA. JVM has access to various first time buyer programs, but they have significant […]Read More

FHA Loan Limits Up Too; Why & When To Use FHA?

HUD recently released FHA Loan Limits for 2018, and in high cost counties they largely (but not always) match the new loan limits for conforming loans. In high cost counties (most of the CA coast), the FHA Loan Limit ranges from $679,650 for a one unit property, all the way up to $1,307,175 for a […]Read More

FHA Financing Is Fast, “As Is,” & Easy; 15 Day Close

Heejin and I did a presentation yesterday on marketing for real estate agents, based on everything we have seen work and not work with the hundreds of agents we have worked with. It went really well, and if anyone would like to see it, please let us know. But, this blog topic surfaced after the […]Read More

What If Spouse Has Horrible Credit? Too Much Debt?

We frequently get husband/wife borrowers where one spouse has stellar credit and the other has awful credit. Most people know that the solution is simply to do the loan in the name of the “good-credit-spouse” only, as long as the good-credit-spouse has sufficient income to qualify on his or her own. The bad-credit-spouse can do […]Read More

FHA Reminders: Attached PUDs, Refi’s to 96.5%; Cash-out Refi to 85%

A few quick but important reminders about FHA Financing, as we get questions often: 1. FHA financing is available for all Planned Unit Developments (PUDs) or “townhomes,” even if they are attached and in large complexes that look like condos. As long as they are not zoned as condos, they are eligible for FHA financing […]Read More

FHA Mortgage Insurance LOWER Than PMI In Many Cases; FHA = Good

FHA = Good. That is one of the primary points we make during our “Mortgage 101” Seminars. This is b/c too many Realtors labor under the myth that FHA financing is inferior to conventional financing. The myth stems from the days when FHA financing took longer to close and required clear Section I termite reports […]Read More

FHA Offers – Higher Esteem; Speed, Flexibility and “As Is”

One of the biggest takeaways from our “Mortgage 101” Seminars is to hold FHA offers in higher esteem. Here are a few reasons why: Speed: FHA Financing does not take longer than other types of financing. Skilled lenders can often close FHA loans faster than other types of loans. We have no trouble closing them in 17 days in […]Read More

BK’s & FHA Financing; 2 Years Seasoning Unless In Chapter 13

FHA requires only two years of seasoning from the date a bankruptcy is discharged. This is relatively well-known. What is not well known is that borrowers in a Chapter 13 bankruptcy do not need any seasoning to qualify for FHA financing, as long they have a one year history of timely payments to the bankruptcy […]Read More

What If Spouse Has Horrible Credit? Too Much Debt?

We frequently get husband/wife borrowers where one spouse has stellar credit and the other has awful credit. Most people know that the solution is simply to do the loan in the name of the “good-credit-spouse” only, as long as the good-credit-spouse has sufficient income to qualify on his or her own. The bad-credit-spouse can do […]Read More

Credit Score Under 700 And Less Than 20% Down – FHA’s Better Deal

We have a borrower with a 670 credit score and 5% down payment who is comparing interest rates on the web, and getting severely misled. Borrowers often do not understand how significantly low credit scores affect interest rates with conventional financing. For borrowers with less than 20% down and lower credit scores (under 700, and […]Read More

FHA Is Faster Than Conventional; Myth That FHA Is Slower

We beat this dead horse often, but it keeps rearing its head. So we are re-beating it: FHA loans do not take longer to close than conventional loans (at least at JVM). They are often faster b/c of FHA’s flexibility. We got the below email from a listing agent yesterday after we closed his listing. […]Read More

FHA Better than 80/10/10 Conventional in Tight Market

We can close almost any purchase transaction in 14 days, using our uber-systematic, assembly-line process. One major exception is 80/10/10 loans with 10% down and a 1st and 2nd mortgage. 80/10/10 loans take us 21 days to close b/c we have to get two loans approved. Hence, if a borrower is making offers in very […]Read More

The Case For FHA: Lower MI; Good for Low Credit Scores; Fast Closing

We are making the case for FHA once again now that MI is so much lower (down to 0.85% from 1.35%). FHA interest rates are much lower than conventional rates, often over 1/2 percent lower. FHA rates are especially competitive for borrowers with low credit scores. It is a myth that FHA properties need to […]Read More

FHA No Longer Finances FLIPS

FHA will no longer finance “Flips.” A “Flip” is any property that was purchased and re-sold within 90 days of the purchase date. This means the contract for 2nd purchase cannot have any dates on it that are within 90 days of the previous purchase. If a buyer goes into contract within the 90 day […]Read More

Lender Credits For Closing Costs Again – Effect on Payment?

Yesterday, we recommended Lender Credits for closing costs for borrowers who are tight on cash. We pointed out how such credits result in higher rates, but we failed to mention the effect on a mortgage payment. Our borrower yesterday had a loan of approximately $400,000. If she locked in a rate of 3.75%, with a […]Read More

FHA Not ONLY For 1st Time Buyers; Who Uses FHA Financing?

FHA Financing is not just for first time buyers. FHA financing can be used by anybody who does not currently have an FHA loan. FHA financing is best for borrowers with limited cash, tight debt ratios, and/or credit issues. FHA is the most forgiving type of financing when it comes to all of these issues. […]Read More

FHA Financing for “Fixer;” Save Cash For Repairs; Refi Later

We sometimes have buyers, with ample cash, use FHA financing to buy total “fixers” and then use their cash savings (from the smaller down payment) for improvements. Once their improvements are done, they come back to us and use their much higher appraised value to do a no-cost refinance into a conventional loan. For example, […]Read More

FHA Loans Do Not Take Longer Than Conventional

We are frequently asked by Realtors if we can close FHA loans as fast as conventional loans, and our answer is always the same: “of course.” FHA loans do not take longer to close than conventional loans if a lender has well-trained staff. It is a myth that FHA loans take longer. There are few […]Read More

FHA Properties Do Not Have To Be In Better Condition; Misconception

We continue to hear Realtors express concern about whether or not properties are in good enough condition for FHA financing (as opposed to conventional financing). This is a misconception left over from years ago when FHA properties needed to have all Section I work cleared. We address this often, but FHA financed properties do not […]Read More

FHA Appraisals – Only One Is Allowed;Value Can’t Change w/ New Lender

We had a borrower leave us for an online lender about a month ago. The online lender screwed up the loan, and the appraisal came in low (despite ample comps that supported value). The borrower came back to us with 8 days left to close escrow, and we could have closed on time but for […]Read More

When a Borrower Must Have 5% of Her Own “Seasoned” Funds

We have a client buying a $426,000 house with almost 10% down and she has to get FHA financing (much to the consternation of her Realtor, who has been burned one too many times by persnickety FHA appraisers). The reason that we have to run with FHA financing is that almost all of her down […]Read More

FHA Appraisals and “As Is” Purchases

We constantly get “As Is” FHA purchases that seem like “smooth-sailing” until the appraisal comes back with all kinds of repair-needs called out. Appraisers have an obligation to call out a whole litany of defects and repairs. If they miss items, they can lose their licenses. These repair items include non-working plumbing and appliances, apparent […]Read More

FHA Requires MI No Matter What for 30 Year Loans

We have a buyer putting down 30% on a $400,000 purchase, and she can ONLY get FHA financing, and she still has to pay for MI (both the monthly rate of 1.10% divided by 12, and the Up Front fee of 1%). And, she has to keep MI for 5 years. This illustrates two points: […]Read More

3% Down Plus 2% Gift = 5% Down; Loan Limits Staying

Recently we touted a 3% down Conventional loan as an alternative to a 3.5% down FHA loan. Drawbacks to the 3% down loan include a very high PMI rate (1.15%), restrictive underwriting guidelines, and significant upward adjustments to the rate for the high “loan-to-value” ratio. Remember that sometimes FHA won’t work because one spouse has […]Read More

Fannie Mae’s 3% Down Loan – Alternative to FHA

Fannie Mae has a 3% Down (“conventional”) purchase that is a good alternative to FHA, if FHA is unavailable. Fannie’s program caps out at $417,000, while FHA goes to $729,750, and Fannie’s rates are higher than FHA’s for this program. In addition, the PMI rate for the alternative Fannie Program is 1.15% (the same as […]Read More

9 DAY CLOSING!!; FHA NOT for First Time Buyers Only

We closed a transaction in 9 business days. We got the transaction last Monday (12 days ago) and are recording today (despite a holiday, a subordination issue, and a minor appraisal issue). This is not the first time we have done this. We did this for Daniel Winkler and Associates in Albany, CA; I am […]Read More

Co-Signer/Co-Borrower NOT Just for FHA; Freddie Allows Them

When discussing conventional or FHA loans, non-occupant co-borrowers, or co-signers, and blended ratios all refer to the same thing: Using a friend or relative to co-sign for a competitive owner-occupied loan even though that friend or relative will not live in the house. (Note: co-signer does not have to be a relative) Many people mistakenly […]Read More

FHA MI vs. Conventional or Private Mortgage Insurance

FHA Monthly Mortgage Insurance is now 1.15% for most borrowers. It was only 0.55% prior to October of 2010; and it was 0.90% prior to today. Borrowers refinancing their FHA loans do NOT get to keep their old FHA MI rates. Up Front MI remains at 1% of the loan amount. This is the fee […]Read More

FHA MI is UP Monday; When Condo Litigation is OK

This is the last day to give us addresses so we can order FHA Case Numbers in order to preserve FHA’s LOWER MI rate of 0.90%. MI jumps to 1.15% on Monday. Buyers with pending short sales that may not close for months (or ever) should still give us addresses so we can order FHA […]Read More

FHA – Pay Interest Through End of Month No Matter When Pay Off Is

Many people don’t realize that when borrowers pay off an FHA loan, they must pay interest through the end of the month no matter when the loan pays off. This often catches sellers by surprise when they have an FHA Loan in place. For example, if an FHA loan pays off on May 5th, the […]Read More

FHA Monthly MI Goes Up April 18th from 0.90% to 1.15%

FHA Monthly MI rates go up on Monday, April 18th to 1.15% from 0.90% for loans at 95% LTV or higher. For loans with LTVs less than 95%, the monthly MI is and will be 5 basis points lower. This is 0.25% increase in rates that fence sitters should well consider (and we have many). […]Read More

FHA MI – Does Little Good to Put More Down; FLIPs OK

Today one of our clients made an offer on a FLIP property (bought less than 90 days ago) and the seller was refusing ALL FHA offers until July 1st. BUT, FHA allows for FLIPs now. Fortunately, the seller called me after getting our very strong and emphatic “Pre-approval letter”, and it looks like our offer […]Read More

FHA Not Only for First Time Buyers; FHA MI to Increase Again

We still get many home-buyers who think FHA financing with 3.5% is only for “First Time Buyers”. That is NOT the case, however. ANY qualified buyer can take advantage of FHA Financing, as long as the property will be “owner occupied”. FHA is increasing their monthly Mortgage Insurance from 0.90% to 1.15% for ALL case […]Read More

EEM Loans for Windows, Doors, Furnaces, etc.

We want to remind everyone again about the availability for EEM loans or Energy Efficient Mortgages. These are FHA loans that allow borrowers to simply tack on an additional $8,000 for energy efficient home improvements (new windows, doors, furnaces, air conditioners, insulation, etc.). We did these types of loans often in 2009. They were quick […]Read More

FHA Buyers MUST Include Spouse’s Credit; Why Our Broker Channel Remains Better than Our Direct Lending Channel

Married FHA buyers MUST provide their spouse’s credit too, no matter what the circumstances are. We often get married buyers who want to get FHA financing on their own, but are precluded from doing so b/c their spouse’s credit is so bad or b/c their spouse has so much debt that debt ratios are pushed […]Read More

FHA Financing

FHA loans represent equally good opportunities for the same reasons Conventional Loans are so appealing – the loan limit goes all the way to $729,750, and the rates are low. Advantages of FHA Loans include: Small down payment of only 3.5% of purchase price Debt ratios up to 57% Entire down payment can be a […]Read More

FHA 203k Renovation Loans

Quasi “Construction” Financing for Properties with Severe Condition Issues 203k loans are excellent option for financing the repair and improvements of properties with severe condition of functionality issues. FHA 203k loans allow potential owner-occupants to finance repairs and improvements of almost any nature, as long the repairs are for an existing property. 203k Loans finance […]Read More

Private Mortgage Insurance vs. FHA (again)

The ridiculously tight underwriting standards that so grate on all of us have the upside benefit of making mortgages more appealing to investors, and thus keeping rates down. We were asked again about the upside of Private Mortgage Insurance (PMI) financing vs. FHA financing. PMI has NO “Up Front” fee at all, while FHA has […]Read More

FHA Stories; Short Sales

One of our top producing Realtors told us this week that none of her Bank clients are accepting FHA offers if there are alternative Conventional or Cash offers, even if the latter are at a lower price. This amazed us b/c FHA is now so much easier and so much more flexible. We have a […]Read More

FHA Mortgage Ins. for 5 Years; Up Front MI Goes Up To 2.25%

Remember that FHA Monthly Mortgage Insurance must remain in place for at least 5 years (even if the LTV is 50%), but borrowers can eliminate MI after 5 years IF they can prove they have 22% Equity (their LTV is 78% or lower). Remember too that FHA’s “Up-Front-Mortgage-Insurance” jumps up to 2.25% (of the loan […]Read More

Non-Occupant Co-Borrowers; FHA Loan Limits; 5/1 ARMs Are Back

FHA is NOT your only option when you have a parent co-signing for a child buying a home. As long there is a sufficient down payment, we still offer conventional financing. Conventional financing is far better than FHA, when available, because the rates are lower and you avoid both Up Front and Monthly Mortgage Insurance. […]Read More

FHA for UNITS; FHA Instead of TIC Financing

Once again, positive economic news signals the market that the Fed may start pushing up interest rates for two reasons: (1) a stronger economy may bring on inflation (higher rates hold off inflation); and (2) a stronger economy does not need the extra support of the Fed’s low interest rates. Don’t forget that FHA financing […]Read More

What To Do If CONDO Project Is NOT FHA Approved?

If a Condo Project is NOT FHA approved, chances are that it is still Fannie Mae approved. If so, borrowers can still get conventional financing with 10% down. 5% must be the borrower’s own funds, and 5% can be a gift. There are advantages to the conventional financing despite the higher down payment requirements; these […]Read More

“Flipped” Properties Are OK; 5% Down for FHA Not Required, But Sometimes Requested

We still get questions about “Flipped” properties, or properties that were purchased by investors less than 90 days ago. We have numerous lenders (both FHA and Conventional) that have NO issues with flipped properties, irrespective of whether or not the current buyer is a potential occupant or an investor. If, however, the price has increased […]Read More

FHA Rules/Dates Again; Spot Approval; Appraisal; MIP Increase

FHA Down Payment: An increase to 5% Down does not seem likely for FHA loans according to several of our lenders. Using our OWN Appraisers: If FHA Case Numbers are ordered on or after Feb. 15th, we are subject to HVCC appraisal rules. This is serious, as our super-skilled appraisers have saved many FHA deals […]Read More