FHA Loans

FHA loans” are mortgages insured by the Federal Housing Administration (FHA), which can be issued by any FHA-approved lender in the United States.

Congress established the FHA in 1934 to help lower income borrowers obtain a mortgage that otherwise would have trouble qualifying. In 1965, the FHA became part of the Department of Housing and Urban Development’s (HUD) Office of Housing.

Before the FHA was created, it was common for homeowners to put down a staggering 50% of the value of the property as a down payment on short-term balloon mortgages, which clearly wasn’t practical going forward.

Unlike conventional loans, FHA loans are government-backed, which protects lenders against defaults, making it possible to for them to offer prospective borrowers more competitive interest rates on traditionally more risky loans.

An FHA home loan works like any other mortgage in that you borrow a certain amount of money from a lender and pay it back, typically over 30 years. The main distinction is that FHA loans charge both upfront and monthly mortgage insurance premiums, often for the life of the loan.

However, they also come with low down payment and credit score requirements, making them one of the easier home loans to qualify for. Oh, and FHA interest rates are some of the lowest around!

Let’s explore some of the finer details to give you a better understanding of these common loans to see if one is right for you.

Qualifying for an FHA Loan

FHA credit score

Because FHA loans are insured by the government, they have easier credit qualifying guidelines than most other loans, as well as relatively low closing costs and down payment requirements.

What is the minimum down payment on an FHA loan?

Wondering how much do you need down for an FHA loan? Your down payment can be as low as 3.5% of the purchase price, assuming you have at least a 580 credit score.  And closing costs can be bundled with the loan. In other words, you don’t need much cash to close.

In fact, gift funds can be used for 100% of the borrower’s closing costs and down payment, making them a truly affordable option for an individual with little cash on hand.

You can get an FHA loan with zero down?

Technically no, you still need to provide 3.5% down.  But if the 3.5% is gifted by an acceptable donor, it’s effectively zero down for the borrower.

For a rate and term refinance, you can get a loan-to-value (LTV) as high as 97.75% of the appraised value (plus the upfront mortgage insurance premium.)

However, it’s important to note that while the FHA has relatively lax guidelines for its loans, individual banks and lenders will always set their own FHA underwriting guidelines on top of those, known as lender overlays.

And keep in mind that the FHA doesn’t actually lend money to borrowers, nor does the agency set the interest rates on FHA loans, it simply insures the loans.

What is the max loan amount for an FHA loan?

The max loan amount (national loan limit ceiling) for FHA loans for one-unit properties is $625,500, with the exception of some Hawaiian counties that go as high as $721,050.  Additionally, the loan limits are higher for 2-4 unit properties nationwide.

However, some counties, even large metros, have loan limits at the national floor, which is $271,050.  For example, Phoenix, AZ only allows FHA loans up to $271,050.  And it’s not much higher in Las Vegas ($287,500) either.

There are other counties that have a max loan amount in between the floor and ceiling, such as San Diego, CA, where the max is set at $546,250.  In other words, you really gotta check your county before assuming your loan amount will work with the FHA.

What are the 2017 FHA loan limits?

In 2017, the max loan amount will increase to $636,150 from $625,500, while the floor will rise to $275,665 from $271,050. These changes will affect 2,948 counties nationwide in a positive way (higher loan limits!).

For example, Los Angeles County will have a max FHA loan limit of $636,150. And Phoenix, AZ is finally getting a bump above the floor to $279,450.

What are the FHA loan income requirements?

Despite some misconceptions, there is no minimum or maximum income required for an FHA loan. This means both low-income and wealthy home buyers can take advantage of the program if they so choose.

However, there are DTI limits that the applicant must abide by, like any other mortgage, though the FHA is relatively liberal in this department.

It should be noted that some state housing finance agencies do have income limits for their own FHA-based loan programs.

Do you need reserves for an FHA loan?

No, reserves are not required on FHA loans if it’s a 1-2 unit property.  For 3-4 unit properties, you’ll need three months of PITI payments.  And the reserves cannot be gifted nor can they be proceeds from the transaction.

What banks do FHA home loans?

If you’re wondering how to get an FHA loan, pretty much any bank or lender that offers mortgages will also originate FHA loans, though because of some recent violations not all lenders take part in the program. However, I’d guess that nine out of 10 lenders still offer them.

Who are the best FHA loan lenders?

The best FHA lender is the one who can competently close your loan and do so without charging you a lot of money, or giving you a higher-than-market rate. There is no one lender that is better than the rest all of the time. Results will vary based on your loan scenario and who you happen to work with. Your experience can even differ within the same bank among different employees.

FHA Mortgage Rates Are Generally the Lowest Available

FHA mortgage rates

One of the biggest draws of FHA loans is the low mortgage rates. They happen to be some of the most competitive around, though you do have to consider the fact that you’ll have to pay mortgage insurance. That will obviously increase your overall housing payment.

In general, you might find that a 30-year fixed FHA mortgage rate is priced about 0.25% to 0.50% below a comparable conforming loan (those backed by Fannie Mae and Freddie Mac).

So if the non-FHA loan mortgage rate is 3.75%, the FHA mortgage rate could be as low as 3.25%. Of course, it depends on the lender. The difference could be as little as an .125% or a .25% as well.

This interest rate advantage makes FHA loans competitive, even if you have to pay both upfront and monthly mortgage insurance (often for the life of the loan!).

The low rate also makes it easier to qualify for an FHA loan, as any reduction in monthly payment could be just enough to get your DTI to where it needs to be.

But if you compare the APR of an FHA loan to a conforming loan, you might find that it’s higher. This explains why many individuals refinance out of the FHA once they have sufficient equity to do so.

Types of FHA Loans

The FHA has a variety of loan programs geared toward first-time homebuyers, along with reverse mortgages for senior citizens, and has insured more than 34 million mortgages since inception.

FHA loans are available for both purchases and refinances, including cash out refinances. The max LTV for a cash-out FHA loan is 95%, assuming the loan amount is $417,000 or smaller, though most lenders tend to cap out at 85% LTV.

For those with existing FHA loans looking to refinance to another FHA loan, the streamline refinance program is a quick and easy option that provides a ton of flexibility, even for those who lack home equity.

Does the FHA offer ARM loans?

Yes, FHA loans can be either adjustable-rate mortgages or fixed-rate mortgages. The FHA 30-year fixed loan is certainly the most common.

However, many FHA lenders offer both a 5/1 ARM and a 3/1 ARM. If the interest rate is adjustable, it will be based on the 1-Year Constant Maturity Treasury Index, which is the most widely used mortgage index.

Does the FHA offer 15-year loans?

Absolutely! You can get a variety of different fixed-rate FHA products, including a 15-year fixed from most lenders. Some may even offer a 10-year fixed product, a 20-year fixed, or even a 25-year fixed.

Can I get a second mortgage behind an FHA loan?

It’s possible, though most FHA loans have very high LTV ratios, and most home equity loans limit the CLTV (combined LTV) to around 85%-95%, so you’ll need some equity before taking out a second mortgage such as a HELOC.

A second mortgage may also come into play when getting down payment assistance during a home purchase, whereby the loan is subordinate to the FHA loan.

Does FHA do construction loans?

Yep. They have a construction program called a 203k loan that allows FHA borrowers to renovate their homes while also financing the purchase at the same time.

Can FHA loans be used on 2-4 unit properties?

FHA loans can be used to finance 1-4 unit residential properties, including condominiums, manufactured homes and mobile homes (provided it is on a permanent foundation), along with multifamily properties.

However, FHA loans are generally only reserved for borrowers who intend to occupy their properties.

Does FHA have to be owner occupied?

Yes, the property you are purchasing with an FHA loan has to be owner-occupied, meaning you intend to live in it shortly after purchase (within 60 days of closing). You are also expected to live in it for at least a year. However, that doesn’t mean you can’t eventually turn your primary residence into a rental.

Can FHA financing be used for an investment property?

The FHA’s single family loan program is limited to owner-occupied principal residences only, meaning investment properties aren’t eligible. But as noted above, 1-4 units are permitted and those additional units can be rented out if you occupy one of the other units. And it may be possible to rent the property in the future.

Can you rent out a house with an FHA loan?

Generally, yes, but the FHA requires a borrower to establish “bona fide occupancy” within 60 days of closing and continued occupancy for at least one year. After that time, it’s basically fair game to rent it out though the FHA does say it will not insure a mortgage if it’s determined that the loan was used as a vehicle for obtaining investment properties.

Can I have more than one FHA loan?

Tip: Generally, you may only hold one FHA loan at any given time. The FHA limits the number of FHA loans borrowers may possess to reduce the chances of default, and because the program isn’t geared toward investors.

For example, they don’t want one individual to purchase multiple investment properties all financed by the FHA, as it would put more risk on the agency. But there are certain exceptions that allow borrowers to hold more than one FHA loan.

Can I get an FHA loan on a second home?

A co-borrower with an FHA loan may be able to get another FHA loan if going through a divorce, and a borrower who outgrows their existing home may be able to get another FHA loan on a larger home, and maintain the old FHA loan on what would become their investment property.

It’s also possible to get a second FHA loan if relocating for work, whereby you purchase a second property as a primary residence and keep the old property as well.

Lastly, if you are a non-occupying co-borrower on an existing FHA loan, it’s possible to get another FHA loan for a property you intend to occupy.

But you’ll need to provide supporting evidence in order for it to work.

Do FHA Loans Require Mortgage Insurance?

One downside to FHA loans is that the borrower must pay mortgage insurance both upfront and annually, regardless of the LTV ratio.

This differs from privately insured mortgages, which only require mortgage insurance if the LTV is greater than 80%.

The upfront mortgage insurance premium:

FHA loans have a hefty upfront mortgage insurance premium equal to 1.75% of the loan amount. This is typically bundled into the loan amount and paid off throughout the life of the loan.

For example, if you were to purchase a $100,000 property and put down the minimum 3.5%, you’d be subject to an upfront MIP of $1,688.75, which would be added to the $96,500 base loan amount, creating a total loan amount of $98,188.75.

And no, the upfront MIP is not rounded up to the nearest dollar.

However, your LTV would still be considered 96.5%, despite the addition of the upfront MIP.

The annual mortgage insurance premium:


But wait, there’s more!  You must also pay an annual mortgage insurance premium (paid monthly) if you take out an FHA loan, which varies based on the attributes of the loan.

Beginning January 26th, 2015, if the loan-to-value is less than or equal to 95%, you will have to pay an annual mortgage insurance premium of 0.80% of the loan amount.  For FHA loans with an LTV above 95%, the annual insurance premium is 0.85%. And it’s even higher if the loan amount exceeds $625,500.

For loan terms of 15 years or shorter, the annual mortgage insurance premiums are significantly lower (see charts above).

Additionally, how long you pay the annual MIP depends on the LTV of the loan at the time of origination.

How do you calculate the annual MIP?

To calculate the annual MIP, you use the annual average outstanding loan balance based on the original amortization schedule. An easy way to ballpark the cost is to simply multiply the loan amount by the MIP rate and divide by 12.

For example, a $200,000 loan amount multiplied by 0.0085% equals $1,700. That’s $141.67 per month that is added to the base mortgage payment.

In year two, it is recalculated and will go down slightly because the average outstanding loan balance will be lower. And every 12 months thereafter the cost of the MIP will go down as the loan balance is reduced.

However, paying down the loan balance early does not affect the MIP calculation because it’s based on the original amortization regardless of any extra payments you may make.

Note: The FHA has increased mortgage insurance premiums several times as a result of higher default rates, and borrowers should not be surprised if premiums rise again in the future.

Do FHA Loans Have Prepayment Penalties?

The good news is FHA do NOT have prepayment penalties, meaning you can pay off your FHA loan whenever you feel like it without being assessed a penalty.

Prepayment penalties aren’t very common these days, though they were quite prevalent on conventional loans during the housing boom in the early 2000s.

There is a caveat…

However, there is one thing you should watch out for. Though FHA loans don’t allow for prepayment penalties, you may be required to pay the full month’s interest in which you refinance or pay off your loan because the FHA requires full-month interest payoffs.

In other words, if you refinance your FHA loan on January 10th, you might have to pay interest for the remaining 21 days, even if the loan is technically “paid off.”

It’s kind of a backdoor prepay penalty, and one that will probably be revised (removed) soon for future FHA borrowers.  If you’re a current FHA loan holder, you may want to sell or refinance at the end of the month to avoid this extra interest expense.

Update: As expected, they eliminated the collection of post-settlement interest. For FHA loans closed on or after January 21st, 2015, interest will only be collected through the date the loan closes, as opposed to the end of the month. Legacy loans will still be affected by the old policy if/when they are paid off early.

Are FHA Loans Assumable?

Another benefit to FHA loans is that they are assumable, meaning someone with an FHA loan can pass it on to you if the interest rate is favorable relative to current market rates.

For example, if someone took out an FHA loan at a rate of 3.5% and rates have since risen to 5%, it could be a great move to assume the seller’s loan.

It’s also another incentive the seller can throw into the mix to make their home more attractive to prospective buyers looking for a deal.

Just note that the individual assuming the FHA loan must qualify under the same underwriting guidelines that apply to new loans.

FHA Loan Credit Score Requirements

FHA credit scores

Can I get an FHA loan with bad credit?

Borrowers with credit scores of 580 and above are eligible for maximum financing, or just 3.5% down. This is the low-down payment loan program the FHA is famous for.

And a 580 credit score is what I would define as “bad,” so the answer to that question is yes.

What if my credit score is below 580?

If your credit score is between 500 and 579, your FHA loan is limited to 90% loan-to-value (LTV), meaning you must put down at least 10%. This is why you’ll probably want to aim higher.

If your credit score is below 500, you are not eligible for an FHA loan.

I can’t find a lender willing to give me an FHA loan with a 500 credit score.

As noted earlier, these are just FHA guidelines – individual banks and mortgage lenders will likely have higher minimum credit score requirements, so don’t be surprised if your 580 FICO score isn’t sufficient (at least one lender goes as low as 550).

Can I get an FHA loan with no credit score?

Surprisingly, yes! The FHA makes exceptions for those with non-traditional credit and those with no credit scores whatsoever. You can even get maximum financing (3.5% down) as long as you meet certain requirements.

The FHA is a little tougher on this type of borrower, imposing lower maximum DTI ratios, requiring two months of cash reserves, and they do not permit the use of a non-occupant co-borrower.

If you have rental history, it needs to be clean. If not, you still need to create a 12-month credit history using Group I credit references (rent, utilities, etc.) or Group II references (insurance, tuition, cell phone, rent-to-own contracts, child care payments, etc.).

You are allowed no more than one 30-day late on a credit obligation over the past 12 months, and no major derogatory events like collections/court records filed in the past 12 months (other than medical).

Assuming you can muster all that, it is possible to get an FHA loan without a credit score. Of course, it’s probably a lot easier if you have a credit score (and a good one at that!).

Since the mortgage crisis struck, FHA loans have become increasingly popular, essentially replacing subprime lending, largely because of their relatively easy underwriting requirements and government guarantee.

But make sure you compare FHA loans with conventional loans as well. There will be cases when the benefit of one outweighs the other.

FHA loans are not guaranteed to be a better deal than other mortgages, so take the time to shop around. And watch out for unscrupulous FHA-qualified lenders who may attempt to misinform you.

Sometimes certain types of loan benefit them more than you, so knowing which is best for you before you speak to an interested party might be the best way to go.

Read more: FHA vs. conventional loans


  1. Leila June 25, 2013 at 9:39 pm -

    I was contemplating an FHA loan until my loan officer and I did the math. The insurance premiums are so expensive now, even if the interest rate is a bit lower.

  2. Dee July 17, 2013 at 6:53 am -

    Agree 100%. I compared rates and fees on FHA loans vs. non-FHA…it’s more than $100 cheaper a month, even though the FHA rate is lower, thanks to the ridiculous premiums they’re now charging. Don’t be fooled by the low advertised rate. The mortgage insurance makes it a bad deal.

  3. Hanna January 22, 2014 at 5:21 pm -

    Can gift funds be used for reserves on an FHA loan?

  4. Colin Robertson January 22, 2014 at 5:32 pm -

    No, they can’t be used for reserves, but they can be used for the down payment and closing costs. Keep in mind that you might not even need reserves for an FHA loan, so it’s not necessarily an issue.

  5. Shayna January 23, 2014 at 11:11 am -

    Hi, do FHA loans require escrow accounts? My lender says they do.

  6. Colin Robertson January 23, 2014 at 3:31 pm -

    Yes, the FHA requires lenders to establish escrow accounts for their borrowers to ensure funds are available for things like taxes and insurance.

  7. John B. February 3, 2014 at 6:48 pm -

    I have been trying to get a FHA loan for a new home so we are adopting our Grand Daughter and need to have a better home to bring her to, anyway we are told that we need a Higher Credit Score more than a 617 or 620 I have found out through this site all you need is a 500 score to get a FHA loan, so why was I told my score was Not good enough, I know people who had gotten FHA loans with lower scores than mine.

  8. Colin Robertson February 4, 2014 at 2:19 pm -


    Most lenders require a higher FICO score for an FHA loan, typically 620+ or 640+, though the FHA guidelines do allow for much lower scores. However, most lenders aren’t willing to underwrite loans with credit scores that low because of the high risk of default. You might want to do more shopping around to find a lender willing to go that low, or work on your credit score a little more to get it above those thresholds. I’m pretty sure there are some lenders willing to go as low as 580. Good luck!

  9. Marcelo February 6, 2014 at 2:04 pm -

    Thank you for the informative rundown, but there’s one thing I’m not clear on. Why do FHA loans have lower interest rates? Is it because they’re guaranteed by the government?

  10. Colin Robertson February 6, 2014 at 4:37 pm -

    Yeah, basically because the federal government insures FHA loans, lenders are able to offer lower rates relative to non-gov loans because of the explicit guarantee.

  11. Gary February 17, 2014 at 6:16 am -

    Good info! I know a lot more about FHA loans now thanks to you.

  12. Abbey March 4, 2014 at 6:25 pm -

    why do fha loans require mortgage insurance even if the LTV is below 80%?

  13. Colin Robertson March 4, 2014 at 7:45 pm -

    Good question Abbey…most FHA loans tend to be above 80% LTV and therefore have mortgage insurance, just as a conventional loan would.

    However, the FHA now requires ALL loans to have both upfront MI and annual MI premiums for a certain period of time, regardless of LTV or loan term. This is a recent change implemented to shore up the FHA’s finances, seeing that they needed a bailout of sorts recently.

    It’s not really fair for low-LTV borrowers, which is why you may want to consider non-FHA options as well if your LTV is below 80%.

  14. Steve May 30, 2014 at 7:42 am -

    I see that I need to pay the last month’s interest regardless of when I close, but I am also being told I need to pay MPI for another month out of my escrow after everything has closed. IE, loan paid off on May 15th and they are taking MPI on June 1st??

  15. Colin Robertson May 30, 2014 at 3:31 pm -


    Are you saying they’re making you pay your monthly mortgage insurance premium for the month of May on June 1st as well? Ask the lender for clarification and let me know.

  16. Ralph June 30, 2014 at 3:35 pm -

    do to 10 collections on credit my score is 502. My banker told me not to try and pay it would make it worse (the truth)
    I am trying to straighten out credit removing old credit. it is hard. Kansas is a stickler for medical bills. Can you offer names of some mortgages company’s that may have mortgage loans to offer me ? I can pay a mortgage as I pay high rent now. Can you help. They say FFA helps but low score – it seems that isn’t accurate……

  17. Colin Robertson June 30, 2014 at 4:40 pm -


    The minimum credit score for an FHA loan is 500, and even then lenders have higher requirements. The lowest score I can think of offhand is 550. The collections may also pose a problem even with a higher credit score. And even then you’re probably better off getting your credit score a lot higher before applying for a mortgage to ensure you get a lower interest rate and avoid any hiccups. A broker might be able to do a search for you to see if there’s hope given your credit situation. Otherwise it might need to be resolved a bit before moving forward.

  18. Kerrie July 5, 2014 at 8:10 am -

    Are you required to make a mortgage payment in the same month you are closing on a FHA loan? They called for a payoff amount already and we should be closing before the 15 th of the month.

  19. Colin Robertson July 7, 2014 at 9:43 am -


    If you’re refinancing an FHA loan, you’ll be charged interest for the full month regardless of when you close. Most lenders try to close FHA refis near the end of the month for this reason.

  20. Martha J. Jimenez July 25, 2014 at 12:41 pm -

    I have a first and second mortgage on my primary residence in PA. I would like to purchase a condo in NC prior to listing my home in PA, and wish to continue employment with my current employer (in NYC) for another year or longer. I will not be renting out either place and would like to settle into a new place gradually. I have conventional mortgages on my home but am interested in an FHA loan on a NC condo. Is this possible?

  21. Colin Robertson July 25, 2014 at 1:34 pm -


    The FHA allows loans on primary residences, so if the condo will be your primary residence, it would technically be allowable. However, you’ll need to qualify for both payments and convince the underwriter that you’re actually going to live in the condo as your primary and make your existing property your second home. In that sense, it could get tricky, especially if you’re unable to qualify for both payments at once. You might want to speak to a few brokers to determine the potential hurdles beforehand.

  22. AssumeFHAloan August 3, 2014 at 12:19 am -

    Thank you, Colin, for all the great info.

    I am hoping you can help me with a few questions:

    We are considering buying a home from someone with an FHA mortgage. He acquired it from the owners before him. I assume the FHA loan can continue to be assumed during the loan and property’s lifetime?

    I read that to get a Streamline Refinance that the home has to have been lived in for 12 months or more, with payments made on time, for the mortgages “endorsed” before 2009. If a loan is assumed, when is the endorsement? At the start of the loan on property, or when new buyers buy the home and assume the mortgage?

    Also, is it possible that the seller in their short time at the home,18 months, took advantage of a Cash-Out refinance after 12 months? I wonder if so because without any real appreciation in value, little maintenance, and zero updates on the home, he is asking for 30k more.

    Thanks for any help you can provide.

  23. Colin Robertson August 4, 2014 at 9:57 am -

    You might want to speak with an FHA lender to iron out all those details, but if you’re interested in buying the house simply to get the assumable loan and then quickly refinance it, does that even make sense? Also, sellers can get value from that assumable loan when setting a list price, so that, coupled with the fact that home prices are back near all-time highs may explain why they’re asking so much. You might question the value of assuming the FHA loan.

  24. John Bluemke August 5, 2014 at 10:51 am -


    I am refinancing out of a HUD loan to a conventional loan. Wells fargo is only allowing for refinancing/payoffs on the 1st of the month – meaning they are charging me for the full month of interest – Is this legally permissible?


  25. Colin Robertson August 5, 2014 at 4:16 pm -


    Not sure it’s a legal issue, but the FHA’s practice of collecting a full month is unsavory at best. Your broker/loan officer should be able to figure out a way to minimize the interest expense, otherwise you might want to shop around.

  26. AssumeFHAloan August 5, 2014 at 6:19 pm -

    We are not looking to refinance. I was wondering if it is possible if the previous owner did. He seems a bit sketchy.

  27. Colin Robertson August 5, 2014 at 10:28 pm -

    It’s possible, could have your real estate agent do some digging for you. But like I said before, prices might be inflated right now, even with an assumable mortgage.

  28. John Bluemke August 6, 2014 at 6:04 am -

    Colin – So I think i have figured this out. When I entered into this loan it was Oct 30 of 2012. I did not make a mortgage payment until Jan 1 2013. Per Wells Fargo, they pay the FHA insurance in arrears – so the payment being collected when the loan is repaid is simply them collecting on money they previously paid out. This makes sense to me now.

  29. Jan Miller August 15, 2014 at 6:54 am -

    I purchased my home with an FHA backed loan 1 year ago. As instructed, I filed for a homestead exemption which I thought was supposed to take effect retroactive for the previous six months taxes. However, my mortgage payment has not reflected any decrease. Does the mortgage lender, Wells Fargo in this case, hold the escrow account or is it held by a third party? I want to know who to contact to find out when I will see a reduction in my monthly payment. Thank you!

  30. Colin Robertson August 15, 2014 at 10:00 am -


    Your point of contact is likely your loan servicer, the company that you make monthly payments to. Perhaps giving them a call will help.

  31. JP Sigmon August 19, 2014 at 4:46 am -

    Colin seems you have a lot of knowledge on FHA loans so I am looking fotr some advice. My county in Indiana maximum FHA loan is $271,000 but I am looking to build a new home that is $350,000. I have to use an FHA loan due to some circumstances how can I come up with the other $80,000 without coming all out of my pocket for the difference? Any other loans you can get on top of the FHA?

  32. Colin Robertson August 19, 2014 at 10:53 am -

    Hey JP,

    As I noted in the post already, it kind of defeats the purpose if you have a first mortgage with the FHA because most secondary lenders won’t provide a high enough CLTV to get the job done, but it depends how much you can put down. And if you must go with the FHA for whatever circumstances you have, it might mean that you won’t qualify for the second mortgage, assuming their guidelines are tougher. But you can certainly shop around and see what’s out there, you never know.

  33. Robert Schumann August 25, 2014 at 4:49 am -

    Hi – can an equity loan be obtained on a home that was gifted. My mother recently pasted away, her house was gifted to my sister. I heard that if you obtained an equity
    loan on a gifted house you then had to pay capital gains.

    A local big name bank is offering her a loan, but I don’t want the IRS to send her a huge bill for the capital gains.


  34. Keri August 25, 2014 at 6:47 am -

    Hi Colin,

    My fiance and I are trying to purchase our first home!! We have come across a few homes we likes that are manufactured with land. We heard those homes would require 10% down. Is this correct?

  35. Colin Robertson August 25, 2014 at 3:47 pm -

    Hey Robert,

    That’s a question better suited for your tax preparer or CPA.

  36. Colin Robertson August 26, 2014 at 9:47 am -


    Congrats on your first home! There are maximum loan amounts for FHA loans on manufactured homes that could limit how much you can borrow and it could also be limited based on your credit score as well (you need at least a 580 score for 3.5% down). Be sure you shop around to explore all your options. Lenders that specialize in manufactured home loans may provide higher LTV limits.

  37. Alfredo Reynoso August 29, 2014 at 9:35 pm -

    Hi Colin,

    I have an FHA loan on my current home for about 4 1/2 years. We are looking to relocate and sell our current home. Are we eligible for an FHA loan?

  38. Kevin August 30, 2014 at 2:11 pm -

    Can I get an FHA loan If I had 3 90 day late payments on my now paid off mortgage 12 mths ago?
    My current income and credit is great. My past is haunting me.

  39. Colin Robertson September 2, 2014 at 12:26 pm -


    Assuming you meet all of the FHA guidelines, yes. Your loan approval will likely be conditional on your current FHA loan being paid off when you sell your old house.

  40. Colin Robertson September 2, 2014 at 1:32 pm -


    You might be able to find a lender, though it depends on the other circumstances of the late mortgage payments.

  41. Allison September 11, 2014 at 11:36 am -

    Hi, I was wondering if more than 2 people can be on an FHA loan to qualify for a higher pre-approval amount? Like for instance me and my mother-in-law as the primary and co-borrower….and then add my husband as the co-signer? I’m asking because my husband doesn’t have good credit while me and my mom-in-law have excellent credit. And because the home we are wanting to purchase is over 400k, we don’t make enough unless we add another person. Is this doable in the state of Texas?

  42. Colin Robertson September 11, 2014 at 12:43 pm -


    It wouldn’t really make sense to buy a home with your mother-in-law if you’re married. And your husband’s credit would still be a factor if he co-signed so that doesn’t really solve that issue. The FHA allows really low credit scores so I’m curious how bad his credit is. Speak with some local brokers to see what’s possible in your situation. They might have some solutions for you, including raising his score.

  43. Michelle September 19, 2014 at 9:26 pm -

    I am trying to by a home with an FHA LOAN and was told by my lender that a $5000 reserve is required. I thought FHA did not require reserves on a single family home? Am I being duped?

  44. Colin Robertson September 20, 2014 at 6:38 pm -

    Hmm…did you ask why? Is your credit low, DTI high, is it a multi-unit property, or is there another reason why you need to bring money to the table? Perhaps an individual lender requirement?

  45. Katie September 21, 2014 at 11:11 pm -

    I bought my first home 3 years ago and have a FHA loan. I have a fair amount of equity in my home because it was a short sale and want to refiance the mortgage to pay off the second mortgage that was offered for my down payment. Do you think I could refinance to combine them? I am terrible at these things and looking for advice.

  46. Colin Robertson September 22, 2014 at 8:37 am -


    It’s possible to refinance two loans and replace them with a single loan, assuming you have the necessary equity. Speak with some lenders/brokers to determine what your best path is…you may also want to consider moving from FHA to conventional because FHA loans have gotten a lot more expensive thanks to the new mortgage insurance requirements.

  47. Marie Alston September 23, 2014 at 6:10 am -

    i am looking to buy a home i have two late mortgage payments from earlier this year
    is it possible to still purchase a home?

  48. Colin Robertson September 23, 2014 at 10:21 am -


    It might be possible – speak with some lenders/brokers that specialize in FHA (assuming you want to go with an FHA loan) and explain your situation. If there are extenuating circumstances for the late payments that certainly helps. And any other strong compensating factors will also help your cause.

  49. Dianne September 29, 2014 at 7:13 pm -

    I am wondering why I have to have so many inspections required by the underwriter on my property in order to refinance. I have a manufactured house, and inspections (along with the costs of the inspections) are mounting. The foundation, the lagoon/septic system, the roof. These were not told to me upfront, and have been a condition bit by bit. Is this normal?

  50. Colin Robertson September 29, 2014 at 9:27 pm -


    The FHA has Minimum Property Standards (MPS) that make it much more difficult to get financing with regard to the property itself, so these issues aren’t uncommon. Throw in the fact that it’s a manufactured home and there are even more guidelines that must be met.

  51. Michael October 8, 2014 at 8:46 am -

    Can you use an FHA loan as a construction loan?

  52. Colin Robertson October 8, 2014 at 5:00 pm -


    You might want to see if any FHA lenders offer construction to perm loans, also known as an FHA OTC (One-Time Close) loan.

  53. Casey October 31, 2014 at 4:12 pm -

    Hi Colin,

    How soon can I refinance my loan after purchasing a home? I want to remove my current co-signer on the loan, and add my mother to the loan and\or have her assume the loan altogether. Is this possible or do I have to remain on the loan as well?

  54. Colin Robertson November 1, 2014 at 10:17 am -


    You can generally refinance whenever, though certain lenders may have seasoning requirements such as six months. If you’re doing an FHA streamline refi, you must make six mortgage payments and 210 days must have passed since the closing date of the mortgage being refinanced. Speak to a few lenders to determine the best way of structuring the new loan, it can get tricky.

  55. momof04 November 19, 2014 at 8:20 pm -

    I need help understanding this,
    I’m about to do closing in a week from now but the lender keep asking me for more bank statement I’m tired to be giving so much information they know that I have the money in the bank can they stop asking because I’m about to stop everything and just relax and do it another time can someone help me understand and if this make any sense to anyone?

  56. momof04 November 19, 2014 at 8:21 pm -

    Sorry and is a FHA loan.

  57. Colin Robertson November 20, 2014 at 10:36 am -

    Ask them why they need more bank statements. It’s pretty common to be asked to send over the same documents over and over, or provide additional bank statements. And if you have the money, there shouldn’t be an issue other than your time being wasted. Just breathe…this happens to everyone and it’s certainly not fun to repeat the entire process a second time.

  58. Yvonne November 23, 2014 at 10:54 am -

    How do you begin to find AZ FHA lenders who offer FHA One-Time Close loans for site built homes? Also, if you own your land, is the value of the land considered toward the down payment if one qualifies for such loan?

  59. Colin Robertson November 24, 2014 at 1:25 pm -


    I’d probably just Google FHA OTC lenders in Phoenix to see who’s out there. I believe land equity can be used toward down payment, but discuss with the lenders you get in touch with.

  60. olga November 27, 2014 at 9:54 am -

    Hi there,
    FHA first time buyers, we found a house and paperwork in process now. Our lender asks for bank statements for the pas 2 months which havent been very high between 2-4k will that prevent us from getting approved? Before we can schedule appraisal? We’ve already done inspection on the home and payed down escrow 2k. Thanks.

  61. Colin Robertson November 28, 2014 at 11:58 am -


    It depends what your other loan details are…your loan officer or broker should be able to figure out what you need in order to qualify.

  62. Lori November 29, 2014 at 7:28 pm -


    Do you know if I am allowed to assume an FHA assumable mortgage (if investment property) or do I have to Owner Occupy it? I might have an opportunity for an assumption but I didn’t know if there is a restriction since its for investment purposes…

  63. DaMona December 1, 2014 at 5:16 pm -

    I was wondering, do you think it would be wise for me get out of my FHA loan and get into a conventional loan? I brought my house in 2009 at 5.5% and in April of 2013 then I refinanced it back through my bank Wellsfargo at 4%. To my surprise I didn’t realize that refining my home in 2013 added more time and money that I have to pay for PMI insurance. Now I am required to start all over on my PMI insurance and I will be paying $118 per month extra for this insurance until May 2018. New American Funding offered to take away the PMI and this will lower my mortgage. Should I just stick out these next five years with my current bank or go and get a conventional loan? Thank you

  64. Colin Robertson December 1, 2014 at 5:23 pm -


    Per HUD rules, FHA loans cannot be assumed by investors if the original closing date of the mortgage is after December 14th, 1989.

  65. Colin Robertson December 2, 2014 at 9:57 am -

    If it’ll be cheaper for you to refinance then you might want to refinance. Just consider closing costs. The FHA has become a very expensive option for homeowners and isn’t really advisable anymore unless you have no other choice. But do the math to make sure it actually makes sense.

  66. Shay L. December 4, 2014 at 6:59 pm -

    Hello Colin…my husband and I are trying to find FHA down payment options. We make over $102k / year and have only $1300 / month in monthly debt, but do not have 3.5% saved up for the down payment. He only has a pension and does not have enough to take out the down payment and I only have $2k in my 401k b/c I changed jobs in the last 3 months and emptied out my previous 401k before that to take care of other financial obligations. We do not have anyone that can gift us the down payment. Can we get a bank loan for the down payment and still qualify for and FHA loan if the house value is $215k? We are hoping that we can get the seller to eat the closing cost. The thing is, we have enough money to comfortably satisfy the mortgage and our other monthly obligations, but we just don’t have the down payment and we don’t know how much longer our “dream house” will be on the market.

  67. Colin Robertson December 4, 2014 at 10:08 pm -

    Hey Shay,

    You might be able to get downpayment assistance via your state housing finance agency if you qualify. Look up your state housing authority online to see what it offers.

  68. Shay L. December 5, 2014 at 10:40 am -

    Hi Colin,

    Thanks for the response. I’ve reviewed the guidelines for downpayment assistance and fortunately (but unfortunately in this instance) our income is too high to receive any assistance. Do you know of any other options for first time home buyers or do we have to just wait until we save up the downpayment, being that we can’t get a bank loan b/c it might mess up the approval process? I am also going to ask the broker. Thanks again for your assistance with this.

  69. Colin Robertson December 5, 2014 at 11:30 am -

    Maybe it’s possible to qualify for one of those programs with just one of you on the loan? In any case, a broker should be able to exhaust all possible options for you, that’s exactly what they’re good for. Good luck!

  70. Konrad December 6, 2014 at 11:15 am -

    We refinanced on 11/21/14 and the loan shows as paid off as of 11/28/14 and we were told that the escrow balance would be returned to use within 10 business days. On 12/5/14 a monthly FHA disbursement was paid from the escrow. Is this normal? Are the disbursements in arrears?

  71. Konrad December 6, 2014 at 11:16 am -

    For clarification, we refinanced from an FHA to a conventional mortgage using a different provider.

  72. Stevie December 6, 2014 at 1:53 pm -

    Hi Collin,
    I recently applied for an FHA loan and I was told that I qualify. My credit scores are very wide spread. 578-670-730. I have a foreclosure and repo on my report so the 578 shows that. I make 60k annual. I was wondering if I am approved, will I be able to get a loan for 145k on a single family house? If so, what would the interest be or how can I find that out? Also, many posts here say the mortgage insurance is high. Any idea what range the insurance is ($100 or $200 a month)?

  73. Colin Robertson December 8, 2014 at 12:13 pm -


    You’ll have to speak with some lenders or brokers to see if you qualify based on all your attributes. From there they’ll be able to quote you a rate as well. And yes, FHA mortgage insurance is very expensive, though it’s typically the only option for many borrowers so they might have no other choice. A broker/lender will also be able to explore options for you given your situation. Good luck!

  74. Colin Robertson December 8, 2014 at 1:49 pm -

    Hey Konrad,

    Could be the mortgage insurance for November. Ask your loan officer or the escrow company for clarification.

  75. Victoria December 10, 2014 at 8:01 am -

    We are in the market to buy a new home. We make over $100/year, have $400,000 in 401K, will have $240,000 cash from the sale of our current home which is paid for. We are working with an investor that suggests we put down 10% toward new home, invest the cash and draw monthly dividends to pay the mortgage payment every month. My husband has a low credit score of about 630. Is it better for us to try to get a FHA loan or a conventional loan and will we qualify for FHA loan with our income and assets?

  76. Colin Robertson December 10, 2014 at 10:31 am -


    Are you saying you make $100 a year, or $100k? I’m assuming the latter. Qualification will depend on the the size of the loan and corresponding monthly payment, but your numbers appear to be pretty good. Downside to the FHA is the mortgage insurance premiums, but interest rates tend to be lower than conventional. You’ve got to do the math to determine which is a better deal for you and how much you put down is preference (if you have that luxury), though mortgage insurance can be avoided with 20% down via conventional route. Might also consider improving husband’s credit score if you have time to do so.

  77. Nikki December 12, 2014 at 1:07 pm -

    Can an executor of an existing ‘estate of’ FHA loan assume the mortgage and simultaneously apply for a modification? (loan is already delinquent and thus can’t do the assumption)

  78. Trisha December 15, 2014 at 2:53 pm -


    I just closed on my mortgage. Our payoff included an amount necessary to go to HUD. The payoff was good through Dec 1st. Our pay off was received on Nov 26th. So before the date needed to make the payoff amount valid. My lender then took out another MI payment from my Escrow account on December 4th. Why did they do that? Shouldn’t our payoff had included all that I needed to pay? They said you pay your mortgage insurance in arrears and this payment would be for November. If that is the case then why did they include amounts to go to HUD on the payoff as well?

  79. Colin Robertson December 15, 2014 at 4:08 pm -


    Sounds like it may have to do with the payoff being dated December 1st. You may want to speak with your loan officer and/or title/escrow company for clarification about where each payment was applied and why. They should be able to clear it up for you.

  80. Michael December 16, 2014 at 2:30 pm -

    I recently changed career fields, i was paid a salary for the past 20 years and now I am 100% commission. My wife has had the same job for 18 years and makes $57k pr year.I have made $30k in the 6 months i have been in this new industry. To qualify for the home we want to purchase we need to make $82k per yr. Can we be approved for FHA with my career change 6 months ago? Just a note we have earned over $100k for the last 10 years, not sure if that maters. Thanks for your answer in advance.

  81. Colin Robertson December 16, 2014 at 11:48 pm -


    That might be a tough one. The FHA makes exceptions for borrowers who have recently changed from salary to commission-based jobs while staying with the same employer, but you’ve indicated a different field. The thought process is that they don’t know what you’ll actually make in your new commission-based position, even if your first six months were stellar. You may want to speak with a broker/lender or two to explore all your options.

  82. Bruce December 18, 2014 at 11:35 am -

    Colin, we currently have an FHA loan at 6% on our home that we have up for sale. We do not think the house will sell soon so we are considering an FHA streamline refinance to lower our payments down. Can we refinance while we have the home on the market? After it is off the market do we have to a wait to refinance? If so how long?

  83. Colin Robertson December 18, 2014 at 7:34 pm -


    You may want to speak with some FHA lenders for specific guidelines, but you’ll likely need to take the property off the market and provide a letter of explanation confirming your intent to keep the property as your primary residence before applying for a refinance.

  84. Erin December 30, 2014 at 12:40 pm -

    Hi we are currently selling our home and the buyers are getting a FHA loan. When the appraiser came our home appraised for more than the selling price. The appraiser from the bank, however, is requesting that we reside our garage prior to the sale. I am confused how this works. Why are we responsible for replacing the siding and is there anyway to get around this? The siding was tented in some places due to tree branches hitting it during a storm.


  85. Colin Robertson December 30, 2014 at 12:51 pm -


    The FHA generally has more requirements regarding the condition of the property to allow for FHA loan approval. Discuss with your lender/real estate agent to see what your options are.

  86. Ryan Packard December 30, 2014 at 1:27 pm -


    I’m impressed that you’ve been so present to answer questions on this blog. Nicely done and thank you!

    I have heard of loans being “called” by the lender where they decide they want the borrower to pay off the entire loan or a large portion of it all at once. This has happened historically few times when lending institutions need cash.

    I’d like to know if it’s possible that my lender can require me to pay a large sum of money all at once or “call” this loan. I feel in a way stuck in that I may not get what I would need for the property to make a sale worth it. On the other hand I bring in an extra $200 / month in income from this property but it is so old that I spend that on repairs. It would give me peace of mind to know that the loan cannot be called by the lender in any way, shape or form. How would I find this out? Does the FHA loan allow it or protect against it? Thanks!

    More Background if needed: I have FHA Loan closed in 2009. Duplex. Was primary residence. Moved out in 2011. Now is an income property. Doesn’t quite break even due to annual repair expenses. Usually I’m out about $800 / year. I’m at about 92% LTV (based on original value of the house at time of loan). Current market probably wouldn’t allow me to bring in too much more than the original appraisal amount. (which happens to be $193,000).

  87. Colin Robertson December 31, 2014 at 11:36 am -


    Why are you concerned that the lender would ask for payment in full? Are you planning on defaulting on the loan? Check your loan documents to see when the lender can accelerate the debt. I think it was common to call loans back in the 1980s when interest rates skyrocketed.

  88. Vicki January 1, 2015 at 1:07 pm -

    Hello, I have recently pre-qualified for an FHA loan for 290K, my credit score is 719, income is at 120K/yr. and I am supposed to go to closing at the end of January. The appraisal came in 10k higher than the selling price. I provided last 2 mos. bank statements along with all other docs., I have over 110k in a 401K, and now, my lender is questioning a negative balance on 1 mos. bank statements, as well as 2 overdrafts on the other months statement. Is this going to jeopardize pre-approval on an FHA loan? I thought that qualifications were less stringent for FHA loans?

  89. Heather January 2, 2015 at 12:00 pm -

    Can you explain reserves a little more? We are approved for an fha loan and got the 3.5% down but suddenly lender is springing 2 months reserves on us. Thanks!

  90. Colin Robertson January 3, 2015 at 1:18 pm -


    You might just need to provide a letter of explanation (LOE) to explain why the account was overdrafted. It’s certainly not a good sign when you get hit with an overdraft, but if you can explain it the underwriter should be able to move past it.

  91. Linda January 3, 2015 at 1:58 pm -

    My husband and I were looking to purchase a home with a FHA loan once I graduated nursing school in April. However, due to a new landlord, we may be forced to move. I wanted to wait so my new salary would be reflected on my loan application. I am guaranteed a nursing job at my hospital. Will the lenders take that into consideration?

  92. Ml January 4, 2015 at 7:44 pm -

    I’m looking to buy a house for 325000, but loan limits for fha is 271000. What. Are my options because i have to go with fha.

  93. Colin Robertson January 5, 2015 at 10:47 am -


    You might want to explore your options just to see if you can qualify via conventional financing as well. Higher loan limits and as little as 3% down could be an easier qualifying option with Fannie/Freddie.

  94. Colin Robertson January 5, 2015 at 11:23 am -


    HUD guidelines state that the new job has to be “a guaranteed, non-revocable contract for employment” and that it must begin within 60 days of loan closing. You may want to speak with some FHA lenders and get pre-approved now before intensifying your home search to clear any potential hurdles.

  95. DAMON January 5, 2015 at 11:44 pm -


  96. Colin Robertson January 7, 2015 at 10:41 am -


    Per HUD rules, if the loan was endorsed on or after December 8, 2004, a refund is due only if you refinance to a new FHA-insured loan. If your loan is older, there’s a chance of a refund and you’d need to contact HUD to see if you’re due any money. http://www.hud.gov/offices/hsg/comp/refunds/fhafact.cfm

  97. Colin Robertson January 7, 2015 at 7:53 pm -


    It means you need to prove that you have two months worth of housing payments (principal, interest, taxes, insurance) in your bank account. Lenders ask for reserves to ensure you are a sound borrower with the necessary funds to repay your loan. It’s possible your overall borrowing profile calls for the reserves to strengthen your loan file.

  98. kay sanders January 8, 2015 at 7:15 am -


  99. Colin Robertson January 8, 2015 at 11:17 am -


    Sorry to hear that. You may want to shop around more to get a second or third opinion in hopes of finding a bank willing to lend. However, it would probably be a good idea to get your credit cleared up before applying for a loan. Even if you could qualify for an FHA loan, you won’t want the lates and corresponding lower credit score hurting your chances of approval or raising your interest rate. Perhaps enlisting the help of a credit expert might help to clear up your credit report if your efforts haven’t been fruitful?

  100. Lynn January 9, 2015 at 10:25 pm -

    I refinanced my home in 2012 and had to take mortgage insurance because I didn’t have enough equity in my home. I want to sell and buy a less expensive home. Can I do this even though I have mortgage insurance and have not paid the 5 years? Will I owe anything at closing?

  101. Colin Robertson January 10, 2015 at 11:29 am -


    When you sell a home and the loan is paid off in full the mortgage insurance is eliminated.

  102. shannon March 16, 2015 at 12:11 pm -

    i have a question I wanted to buy house that am now living in and go through fha for loan they told me I couldn’t do loan cause im living here and paying rent with cash have receipts they wouldn’t do loan why??

  103. Colin Robertson March 16, 2015 at 3:09 pm -


    They want to know that you’ve been paying rent on time, and cash payments to an individual, as opposed to a property management company, are hard to prove without cancelled checks, especially if they are made to an interested party. Can you prove monthly withdrawals of the cash to pay rent, and/or can the owner document the monthly deposit of your rent payments? You can ask your loan officer what alternatives you have.

  104. Dd March 17, 2015 at 7:30 pm -

    We have a mortgage on a mobile home through greentree financing, but it is not listed as a mortgage on our credit report which is keeping our score down. My questions is if I have this changed to show as a mortgage on our credit score will that keep us from getting an FHA loan on a new home?

  105. Colin Robertson March 18, 2015 at 10:50 am -


    Probably not best to sneak around the FHA…and it may show up on a different credit report even if the one you’re looking at doesn’t have it listed.

  106. Shannon Buhler March 25, 2015 at 6:59 pm -

    We are looking into buying our first home and trying to decide how much money to put down. We are close to having 10% to put down. We are wondering if it is worth it to put more money down in terms of rates and insurance expenses? Or if it matters? This is an FHA loan we are looking at and the money we have is gifted money.

  107. AA March 25, 2015 at 8:23 pm -

    Hi Colin,

    I own a house insured by FHA in Dallas TX since 2008. I had been paying my mortgage on time until in 2004 I had 4×30 days and 3x60days late payments. I moved to GA in 2011 and rented out my house where as leases a house in GA. this month I move to Houston TX due to Job.since Feb 2015 I am regular on payments. I make 110K+ 20% bonus income per year. My current credit score is 617- 618 – 610. I have 5% down. I read on Hud.gov. website that if you are relocating you can get a second FHA loan, is it true?. Please advise what I need to do in order to get approved for 300K mortgage. I have till end of June to find a place to live. Thanks in advance

  108. Colin Robertson March 26, 2015 at 7:58 am -

    Hey AA,

    It’s possible but you’ll need to provide supporting evidence of the move and obviously qualify for the new loan.

  109. Colin Robertson March 26, 2015 at 8:40 am -

    Hi Shannon,

    A 10% down payment can reduce the requirement for monthly mortgage insurance to 11 years instead of the full loan term. With 20% down you can avoid mortgage insurance altogether if you can qualify via the conventional route.

  110. RebeccaH March 31, 2015 at 6:06 am -

    I am at the end of a refinance to a 7 year ARM on my home that I purchased in 2010 using an FHA loan. The loan is through Wells Fargo. My new title company and loan officer did not know about the extra interest I would be charged at my payoff, which is very unsettling because it is about $2000. How did she not know? Now, the title company is wanting me to close on April 5-7. I thought that Wells FHA loans have to be closed/paid off on the 1st of the month? I called WF and they said that if they receive my payoff anytime after April 1st that I would be charged more money. My new loan officer is saying otherwise because of a payoff statement that they received from WF. Who do I trust!? Can you explain the severity of the first of the month payoff? I of course want to spend as little as possible, so should I wait until the end of April?

  111. Colin Robertson March 31, 2015 at 10:46 am -


    Your LO should schedule your loan closing to minimize or eliminate post settlement interest. The FHA requires interest to be paid for an entire month so if you close early in the month you’ll have to pay interest for the entire month. This is why it’s best to close near the end of the month.

  112. Brian March 31, 2015 at 9:29 pm -

    Hello Collin I purchased my manufactured home just before the pmi changed in June of 2013, i was told by my bank I can refinance now and pull equity from the loan and get rid of my pmi all together. I called tonight to procede and was now told there is no lender that will give cash for equity to someone who owns a manufactured home. First is this true? Second what other options do I have ? Thank you very much any advice is greatly appreciated !

  113. Colin Robertson April 1, 2015 at 9:48 am -

    Hey Brian,

    I’m assuming you want to switch to conventional to drop the MI and pull some cash out. The max LTV for cash out on a manufactured home might be as low as 65%, so you’d need a lot of existing equity and remaining equity once pulling the cash out.

  114. Mike B April 3, 2015 at 5:26 pm -

    I have an FHA loan for a property in Denver CO that I have been living in for about a year. I plan to move to New Orleans soon. I will rent out my current property. I will want to purchase a new Multi-Unit Property in New Orleans using an FHA loan. I am self employed freelancer that makes my money over the internet. Good Credit. Will I be able to get a second FHA if I move? Will I need to prove a new job in that new city? Could I get the loan before I move? I cant seem to find any info on this online. Your site seemed helpful. Please let me know. Thanks

  115. Colin Robertson April 4, 2015 at 12:08 am -

    Hey Mike,

    If it makes sense to the underwriter it’s a possibility. Might be best to speak with some FHA lenders upfront to ensure there aren’t any issues. There’s also the conventional loan route to consider.

  116. M. Amos April 8, 2015 at 10:55 am -

    I have a relative in the process of purchasing a home, it is not their first home. They like the home that is about to be closed on. But a good friend has a home for sale. The second home is the same price as the first home they are in the process of buying. The credit score is not perfect but they have qualified for the first home. They are being told by the underwriter, if they try to qualify for the second home that is a little larger and in their neighborhood; that they would love to stay in because of the excellent school system; that the lender more than likely will not want to change the loan agreement to allow them to change to the second home. I guess my questions is, if the lender will not allow the loan to change to the second home, will the first home be disallowed?
    thanks for any suggestion or help you can offer.

  117. Colin Robertson April 8, 2015 at 1:03 pm -

    Did you ask why the lender has an issue with what they’re trying to do? Maybe they want them to cancel the existing purchase contract and sign the new one before reapplying for a loan for the new home.

  118. TIna April 11, 2015 at 10:16 am -

    My husband and I live in NC. Combined income of $120K/yr. Combined DTI of 12.8%. We both had very low credit scores and have been working to improve them. (previous divorce and lengthy period of unemployment when the economy crashed in 2008) His scores are Trans 582, Equifax 580. Mine are Trans 630, Equifax 641. (as of today, per credit karma) We are anxious to purchase a home and stop paying rent. We realize with our current credit scores, FHA is likely our only option. What is the likelihood of qualifying for a 3.5% FHA, and can you recommend a lender who may consider? I know that although FHA allows for a lower credit score, finding a lender who does is challenging. We realize that if we continue to improve our scores, we may be in a better position in a year or two, but we will be leaving our current rental soon, and I’d like to buy vs rent again. Any advice would be appreciated.

  119. Colin Robertson April 11, 2015 at 5:27 pm -

    Hi Tina,

    As you mentioned, your credit isn’t great, but your DTI is low and you make what appears to be decent income, hopefully with steady jobs despite the 2008 hiccup. Hopefully you have some assets set aside too. There are FHA lenders that go down to 550 scores, such as Carrington, which I wrote about last year and included in this very article if you scroll up. But that’s just one of probably many that offer FHA loans with scores that low. So it’s still probably best to shop around and find a lender you are comfortable with. Good luck!

  120. Summar April 14, 2015 at 6:30 am -

    HI Colin
    Can i get approval for an FHA loan if I want to buy the house that I’m renting for the past six months,

  121. Colin Robertson April 14, 2015 at 11:41 am -

    Hi Summar,

    You’ll need to speak with an FHA lender to determine eligibility. It depends on a number of factors including income, assets, job history, credit, etc.

  122. Summar April 15, 2015 at 9:02 am -

    I mean does it matter that I’m renting the house that i want to buy, does FHA Puts the condition of not having a relationship with the seller

    thank you

  123. Colin Robertson April 15, 2015 at 11:39 am -


    The key will be verifying on-time rental history via cancelled checks.

  124. Stephanie April 18, 2015 at 11:38 pm -

    Hi Collin-

    I am trying to purchase a home. I had to file bankruptcy due to parting ways with my fiance. I had excellent credit before that and have a credit score of 702 now. It will be 4 years since the discharge in Feb 2016. I will not qualify for a conventional loan until that 4 year mark. I even have 20% down. But since the only thing I qualify for is an FHA loan- I will be stuck paying MI anyways. I was wondering if I have a cosigner with excellent credit and financial means in case I default (which I won’t) is there any chance I could obtain a conventional loan with the cosigner even though I haven’t hit the 4 year mark yet?

  125. Colin Robertson April 20, 2015 at 6:29 pm -


    A co-signer won’t change the fact that you had a recent BK and your credit is also considered. Alternatives may include a portfolio loan (non-Fannie/Freddie), or perhaps getting that person to apply alone if they are a spouse or someone you’ll actually live with and they are able to qualify on their own.

  126. Shelly April 23, 2015 at 8:59 am -

    Hi Colin,

    How long does it take for the loan to be approved in underwriting? The loan has been in underwriting for 10 days now so getting kinda nervous!!

  127. Colin Robertson April 23, 2015 at 10:03 am -


    It depends on the lender and what turns times are like based on volume. If you have concerns, let your loan officer and ask for status updates.

  128. Steve April 29, 2015 at 10:38 am -

    So I get a deduction from the FHA. I go through the process and they want me to pay $750.00 to receive my government issued discount! Does that sound right? WTF mate?

  129. Colin Robertson April 29, 2015 at 11:05 am -


    What discount/deduction are you referring to?

  130. Michelle May 4, 2015 at 1:06 pm -

    Hi Colin,

    One lender is telling me that if we put 10% down then MIP on FHA is only for 11 years. Another lender (the one we have pre-approval with) is telling me that no matter what the MIP is for the life of the loan? I’ve looked at the applicable Mortgagee Letter and the 11 year rule seems right. Can a lender ignore this 11 year rule (for when LTV is at or below 90%) and make MIP for life of the loan?

  131. Valerie May 4, 2015 at 3:35 pm -

    We are in the process of buying a house, we put an offer on a house that needs some repairs, and we applied for an FHA 203K and were denied. Our loan officer said that we are approved for a regular FHA but not a 203. We just moved from NY to GA as per our loan officer as of June 2015 the requirements for an FHA loan will change and 2 years with the same employer will be required, which is impossible for us because we have only been here a year. Is that truth? or is our loan officer pushing us to get this house?

  132. Colin Robertson May 4, 2015 at 3:54 pm -


    The lender is probably either misinformed or giving you incorrect information. You may want to ask them again if you intend to use them to make sure everyone is on the same page. It should only be for the full loan term if the LTV exceeds 90% at origination.

  133. Colin Robertson May 5, 2015 at 3:19 pm -


    There are some changes coming this summer, though I believe the implementation date was extended from June 15th to September 14th, 2015. You could ask what specifically will change to affect your specific eligibility. I believe there’s a change that will require part-time employment to be uninterrupted for at least two years.

  134. steve May 6, 2015 at 10:01 am -

    I am referring to the FHA insurance rate reduction.

  135. Colin Robertson May 6, 2015 at 11:48 am -


    You’d have to refinance to get the new lower annual MIP rate, such as 0.80% or 0.85%. Just beware that mortgage insurance stays with the loan for at least 11 years now.

  136. Tran May 12, 2015 at 1:59 pm -

    I bought my house 2 years ago. I have FHA loans. When I signed the paper work, I asked the loan officer that they will take off the mortgage insurance when I paid up to 20% in 2 years, they said yes. But now I call wells fargo to request them to take off mortgage insurance. They told me have to wait until 5 years, then I can call them back to do that. Can you tell me what happens and what can I do? Thanks!

  137. Colin Robertson May 12, 2015 at 10:34 pm -


    When you got your FHA loan it probably required the annual MIP to be paid for a minimum of five years regardless of LTV. It should fall off once the LTV reaches 78%.

  138. Tran May 13, 2015 at 4:28 pm -

    I paid 86% off the house.

  139. Bri May 27, 2015 at 7:56 am -

    Hello Colin,

    I just refinanced from an FHA to a conventional, i closed 5/22/15, it is due to fund tomorrow. My question is, will i receive a refund of the mortgage insurance in escrow (my taxes have been paid for the year)?


  140. Colin Robertson May 27, 2015 at 9:32 am -


    Probably best to ask escrow or your loan officer/broker exactly what is being refunded.

  141. Larry May 28, 2015 at 9:56 am -

    I refinanced my house last year with a 15 year FHA loan. When I signed the papers last year my loan officer mentioned that the loan did not have mortgage insurance which someone forgot in the bank system. Now my bank wants me to pay mortgage insurance for the past months and going forward. Can they legally make me pay, even though the loan papers show no mortgage insurance?

  142. Colin Robertson May 28, 2015 at 11:35 am -


    Not sure of the legalities, but if mortgage insurance should have been included and was left off by mistake, the lender may have an argument to charge it.

  143. Christie May 31, 2015 at 7:34 am -

    Are FHA loans assumable if the owner is renting the property as opposed to living in it as primary residence?

  144. marc June 1, 2015 at 11:34 pm -


    You definitely have acquired an impressive following! I have recently been told that my FICO score of 581 will not help me qualify for an FHA loan here in Northern California, ( I had one reporting agency list my score at 610), however, both of the mortgage brokers I am working with have been very upfront in telling me that because my FICO score is not at least “620” I will not qualify for an FHA loan. I have worked for the same company for 20+yrs, average about $150,000 per year in income, and I am trying to buy the condo that I have been renting for the past 5 years from owners who now want to sell, and they want to sell to me! Am I missing something here? Thank you. Marc

  145. Colin Robertson June 3, 2015 at 4:28 pm -


    Maybe the folks you’ve talked to don’t work with FHA lenders that go below 620. There are indeed FHA lenders that go down to 550, though you still need other attributes like income and job to get approved.

  146. Colin Robertson June 3, 2015 at 4:39 pm -


    If you mean the current owner is renting it, approval would be based on the buyer occupying the property upon assumption.

  147. Marissa June 5, 2015 at 7:26 am -

    If my mom gifts me the money for the down payment on an FHA loan, does she have to provide her bank statement? She does not want to give a full detail bank statement to the lender. Any advice?

  148. Colin Robertson June 9, 2015 at 10:13 am -


    It might be possible to provide a withdrawal document or cancelled check that shows the money came from the donor’s account. Speak with your loan officer to determine what works with them.

  149. Nancy June 21, 2015 at 10:41 pm -

    We are obtaining an FHA loan because they’re allowing a higher DTI which we need. Although we are putting over 40% as a down payment, and will have an LTV of 54%, we are told that there will be mortgage insurance for the life of the loan. Is that right?

  150. Colin Robertson June 22, 2015 at 9:29 am -


    Mortgage insurance must be paid for 11 years if the LTV is 90% or less.

  151. Ashley June 22, 2015 at 12:30 pm -

    We are first time home buyers and I need advice. Is a FHA loan a good route to take or should I speak to someone at my bank and try to get a loan from them? I have over 600 credit score. I just would like to know where to start exactly.

  152. Colin Robertson June 23, 2015 at 8:09 am -


    It really depends on what you can qualify for…FHA is generally for those with credit scores below 620 and/or small down payments (check out by comparison post for the pros and cons). Your local bank may be a good starting point to see what you qualify for (ask for a pre-qual or pre-approval), though you don’t have to use your local bank to obtain financing when you’re ready to buy.

  153. Cesar June 24, 2015 at 11:34 am -

    Hello Colin,

    We are pre approved with a broker but my wife decided to drain our bank account to $100. I am commission based at my job so my 3.5% down payment will be there at closing. However, it’s not there right now. Will this be an issue once our paperwork goes to get a full approval?

  154. Colin Robertson June 29, 2015 at 11:58 am -


    Best not to touch the money in that account during approval process (as you probably know), but paychecks are typically treated as sourced and seasoned. Ask your broker to be sure how it will be treated.

  155. Sonja June 30, 2015 at 6:32 am -

    Hi Colin,

    Glad this thread is still open and you are responding. My husband and I are in the process of getting an FHA loan. After negotiations, we and the seller decided on 219K for the house. However, our broker has told us that the contract to purchase needs to reflect our need for the total loan amount (229K) because of escrow and closing costs. The seller will credit the difference through concessions at closing (still netting 219K) but I am worried about the appraisal of the home. Will it need to be worth 219K or 229K for us to get approved the full amount that we need?

  156. Colin Robertson July 1, 2015 at 2:18 pm -


    It will need to be worth the purchase price. Banks lend on the lower of sales price or current appraised value.

  157. Amy July 1, 2015 at 3:09 pm -

    Hi Colin,

    My fiance and I are in the middle of purchasing our first home together. The loan officer just submitted all of our paperwork to the lender. We have 730+ credit scores and verifiable income together of about 105K. Loan requested is 166k. My fiance is borrowing against his 401k for the 3.5% down payment. My concern is when they look at my bank statements because some of my deposits reflect more than my take home for that pay day because my dad has been helping me pay off my credit card debt. So there are a few deposits that are 200-700 more than my payroll. For the remainder of escrow, I am not depositing anything extra into my checking. Do you think the mortgage will still be approved?

    I forgot to mention that my loan is FHA.

    Thank you.

  158. Colin Robertson July 2, 2015 at 11:28 am -


    Do you have to provide those particular bank statements? If so, they may ask you to explain those large deposits and indicate that you haven’t taken on a new debt obligation in exchange for that cash. May want to discuss with your loan officer to determine best way to proceed.

  159. Annie July 7, 2015 at 1:15 am -

    Is it better to go with FHA loan at 4.5% with lender credit of $7500 for a loan of $625k or private loan of 4.8% with closing cost of $5174?

    The house price is 1.53m. I plan to pay off the loan after 6 months.
    Thank you

  160. Colin Robertson July 7, 2015 at 9:37 am -


    If you only plan to keep the loan for six months a lender credit is a good way to go because it covers your closing costs in exchange for a higher interest rate, but it doesn’t matter as much because you’ll only have that interest rate for half a year.

  161. susie July 7, 2015 at 10:27 am -

    I closed on a FHA loan about 12 weeks ago. Loan has already been sold from original bank to Wells Fargo…2 mortgage payments have been made. Today, original bank called telling me that FHA can’t insure the loan unless we are able to furnish documentation from our “gift donors” that shows the withdraw from donor’s bank account. I found a HUD document stating that this is, in fact, required. How can we be this far out from closing and this issue be brought up??? What happens if I can’t get that documentation from the gift donors? We had 4 separate gift deposits for this loan and I fear that some of those that gifted money won’t provide the documentation.

  162. Colin Robertson July 7, 2015 at 11:46 am -


    This sort of thing happens when something gets overlooked and is later discovered. You may have signed something related to errors and omissions for this very reason. Probably best to work with your lender to resolve the issue…everyone will likely be on the same side wanting to get it worked out.

  163. Lata July 15, 2015 at 1:51 pm -

    I filed chapter 13 then I converted it into a chapter 7, I have a foreclosure as well, How long will it be before I can apply for a FHA loan?

  164. Colin Robertson July 15, 2015 at 2:04 pm -


    3 years, or 1 year if extenuating circumstances.

  165. Ken July 21, 2015 at 9:46 pm -

    I am a retired real estate broker, my wife currently an active real estate broker (Alabama) and we’re working with an outstanding Tx Realtor, assisting our daughter in Houston, Tx with her first home purchase using an FHA insured loan. We made an offer on the perfect property but got a troubling reply from the “seller”. Seller is the builder on this 1 year old home which has apparently never been sold. Builder/seller leased the new home upon completion of construction and lessee’s lease has expired. Property now for sale. Builder, his real estate broker, and his mortgage broker, are partners in the “entity” that owns and is selling the property. Builder/seller replied to our offer verbally that they could not sell the property to a buyer with FHA financing because of a “recent entity name”change, unless the buyer used his lender, who has had success getting around the FHA regulation. When told to respond in writing, his answer was a little more ‘carefully’ worded. He said seller was asking buyer to talk to one of his lenders that have closed his listings before. Due to the FHA Flip Rule FHA, would not allow the home to be sold due to their recent entity name change. He said he has managed ownership but the name change is really messing up his buyers and that he has lenders who have cleared this condition in the past and successfully closed on the loans. Something doesn’t feel right about this. Hard to find good properties in our, price range in Houston right now and we would love to get this one done. BUT, we need insight from an expert here to get to the bottom of this. It will be on the up and up or not at all. Please advise. Thanks so much.

  166. Colin Robertson July 22, 2015 at 10:52 pm -


    Maybe ask how his guy would get around the rule and/or consider going the conventional route instead if possible to avoid the FHA rule. Also research the 90-day anti-flip rule.

  167. lexie July 23, 2015 at 11:14 pm -

    seller will not help with closing cost, but i know that the house is/has been appraised for close to 175000 and he is only asking 100000. we put the 3.5% down but my question is how can i get help with the closing cost?

  168. Colin Robertson July 25, 2015 at 8:32 am -


    You could take a lender credit to cover the closing costs, or look into a state housing assistance program, or ask for seller concessions whereby he raises the purchase price.

  169. Rosa Castillo August 4, 2015 at 2:29 pm -

    Do you have to pay mortgage insurance on an FHA loan if your coming in with 25% down payment on the purchase?

  170. Lorin August 8, 2015 at 2:44 pm -

    Hi Colin,

    I want to buy a condominium and read about the FHA Approved Condominium data base that lists all condos already FHA approved. I plugged in my info and couldn’t believe that it didn’t have even one approved condo in the entire state of Illinois.

    My sister already lives at the complex I’m interested in buying into. It has two, 3-story buildings each with an elevator and underground parking garage. They were built in the 70s, have been maintained well, and have plenty of funds set aside for continued upkeep, etc. The only allow a small percentage of non-owner occupied units.

    Will it be hard to find a lender to finance an FHA loan around $65,000?

    Thanks for your insight,

  171. Kim Houston August 10, 2015 at 12:54 pm -

    I’m in the process of refinancing my home after being a victim of predatory loan practices by a mortgage broker and my spouse. I didn’t read all the documents and sign a 30/40 yr balloon adjustable rate loan. The new loan will be a 30 year fixed FHA loan. The payoff on the loan is approximately $209,000 but with all the fees on the new loan I would be refinancing $218,915. The estimated fees are orignation $2151, appraisal $553, mortgage insurance premium $3765, title services $1,238 and miscellanous fees. Are these closing fees reasonable? Also, I’m paying $143 per month in mortgage insurance in addition to the premium above.

  172. Tom August 14, 2015 at 5:38 pm -

    My CPA says that if I sell my home within 5 years, HUD will refund me the unused portion of the upfront MIP I payed when I bought my home. Is that true?

  173. Colin Robertson August 16, 2015 at 9:03 am -


    Yes, now mortgage insurance is mandatory on FHA loans no matter what. See my charts on annual MIP here: http://www.thetruthaboutmortgage.com/detailing-the-fhas-new-annual-mortgage-insurance-premium-structure/

  174. Shawn Wilson August 19, 2015 at 7:03 pm -

    Hello Colin, i have an FHA loan at 3.37% for 30 yrs obtained Dec 2012 because i could only put down 3.5%. I was misinformed about how long mortgage insurance stays on the loan. The house has now appreciated more than 20% and I have been told it doesn’t matter and that mortgage insurance will stay on it the life of the loan (it irks me because it is $86 a month). I now have a chance to refinance with a conventional loan at 3.8% for 15 yrs. I have been told it will do away with the mortgage insurance because it’s a conventional loan. tempting, but am I making the right decision to refinance? thanks so much.

  175. Colin Robertson August 20, 2015 at 9:21 am -


    Mortgage insurance is just one aspect of the decision – you’re also switching from a 30-year to a 15-year loan and the rate is higher. Look at everything while also taking into account your plans with the house/mortgage, how long you plan to stay, your goals, etc.

  176. Tim August 24, 2015 at 10:10 am -

    If an employee is buying a home from an employer is there a max LTV?
    And if so, why?

  177. Colin Robertson August 26, 2015 at 3:43 pm -


    It may be treated as a non-arms length transaction and possibly a conflict of interest, which could limit the LTV to 85%.

  178. Justin August 27, 2015 at 6:08 pm -


    I am impressed with how many comments you’ve replied to.

    We bought a house with an FHA loan in June 2013. We got in before the insurance rules went to 11 years, we’re in a 15 year mortgage with 5 years of PMI or 78% LTV if I remember right.

    My question is what if we want to sell/refi before our 5 years are up? Are we still on the hook for the remaining PMI?

  179. Colin Robertson August 28, 2015 at 11:27 am -


    If you sell/refi to conventional the mortgage insurance stops. MI covers the loan, if the loan is no more, insurance isn’t necessary.

  180. Lisa September 1, 2015 at 10:15 am -

    Hi MIP was deleted from my loan and I received a letter from my lender stating, “We are pleased to inform you that HUD has revived and approved our request to eliminate the Mortgage Insurance Premium (MIP) coverage on your loan. There will be no further payments payable by you in connection with the MIP.” Three months later my loan was sold to another lender. A month later I sold the property, and the new lender collected two months worth of MIP at closing. I did not know this because I did not receive the payoff statement until after closing. I have tried to contact the new lender and get a reimbursement of the MIP collected from me at closing because MIP was deleted 4 months prior. The current lender is saying I still owed the MIP. What are your thoughts?

  181. Colin Robertson September 1, 2015 at 6:36 pm -


    Ask them why you owe the MIP and for which months. Since mortgages are paid in arrears sometimes it seems like you already paid something when in fact you haven’t.

  182. carol September 2, 2015 at 10:58 pm -

    I know that FHA and any mortgage for that matter require that you have hazard insurance on the property. My question is, am I allowed to choose the company I want to buy the hazard insurance from as long as it meets lender requirements for coverage and amounts. This is for an FHA guaranteed loan that has been two months in the making. Now the mortgage broker says it will be at least another 3 weeks because of the wildfires in the northwest. He says the insurance company is not issuing new policies at this time. Can I look for another insurance company on my own that would be willing to provide coverage?

  183. Colin Robertson September 3, 2015 at 9:04 am -


    You should be able to select the homeowner’s insurance of your choice.

  184. Justin September 4, 2015 at 1:19 pm -


    If you sell/refi to conventional the mortgage insurance stops. MI covers the loan, if the loan is no more, insurance isn’t necessary.”

    That’s what I was hoping, thanks for your reply, with rates coming in it seems like a good time for us to either sell or refi, we’ll see what our finance guy has to say.

    Thanks again for helping me and so many others on this post.


  185. Sue Meckeler September 4, 2015 at 3:08 pm -

    Hello, I work for a firm that helps trouble homeowner’s. Can a FHA loan be sold to another lender and no longer be an FHA loan? I have a client who executed a FHA mortgage in 2007 and went into default in 2012. Loan has switched servicers and they applied for mortgage assistance with the new Mortgage company. The loan modification offer does not follow FHA loss mitigation guidelines. What happens when a borrower defaults on a FHA loan?

  186. Florence Homan September 5, 2015 at 4:22 pm -

    My husband and I just purchased a home in SC. We obtained an FHA loan. We also own a coop in NY which is free and clear. We were asked at closing to sign a paper saying we would make this home our primary residence. Now we are finding out that if we make this home in SC our primary we will lose our medical coverage. What do you make of this? Thank you.

  187. matt September 6, 2015 at 5:05 pm -

    I got approved for a house for 83000 and up but im looking at a cheaper foreclosed home at 64000 its not more than ten years old is that ok

  188. Colin Robertson September 8, 2015 at 9:15 am -


    That sounds like an issue with your medical insurance, and new FHA loans are only good on primary residences which is why they asked you to declare that.

  189. Colin Robertson September 8, 2015 at 9:37 am -


    Sometimes very small loans can be harder to obtain, but ask your lender if it’s an issue.

  190. Heather September 14, 2015 at 11:18 am -

    I bought my condo with an FHA mortgage in 2005. At that time, I was told that the mortgage insurance should come off in 7 years, but could not be removed prior to 7 years, even if I paid off a significant portion of the mortgage. My loan was quickly sold off to another bank. When I inquired about having the mortgage insurance removed, I was advised that because I live in a condo, I can never have it removed. I don’t understand this at all. Are you aware of this rule? It doesn’t seem right, and is contrary to what my lender told me when I got the mortgage. Additionally, I am now at 64% LTV.

  191. Colin Robertson September 14, 2015 at 3:13 pm -


    Do you think they’re confusing property insurance with mortgage insurance? The 7-year estimate was likely based on original amortization schedule if payments were made as expected.

  192. Lamar Washington September 18, 2015 at 9:08 am -

    Hi. I am looking into purchasing home for 1st time. I have been going thru credit restoration and currently my scores are EQ 657, TU 600 and EXP 610. But that is score with a soft pull. I know when mortgage companies, they will get a different score. I would like to go FHA, 3.5% down. my yearly income is about 90K. Should I wait longer or should I work with mortgage company to apply? I was told that your FICO should be minimum of 640. But I also spoke with a company named Carrington that say they will work with you if your score is lower than that. Thoughts?

  193. Heather September 18, 2015 at 11:28 am -

    Colin, thanks for the reply. I don’t think so, no. I don’t have property insurance bundled into my mortgage. My concern is not so much the 7 year rule, but the fact that my mortgage company is now telling me that because I’m in a condo, they can never remove my fha mortgage insurance. Have you heard of this? I’m having trouble verifying this.

  194. Denise September 23, 2015 at 9:30 am -

    I have a FHA loan and I want to combine my HELOC with my first mortgate to have one payment. Will I be able to do the FHA Streamline Refinance.

  195. ELLIS September 24, 2015 at 9:13 am -

    HI, My husband and I are currently in the process of purchasing a home through a fha. Our closing date was set to be last week but was changed the day before due to the seller not disclosing that the house was being flipped in less than 90 days. I was told that the home has to get more appraisals. My question to you ; How long could this process now take? Could I ask the seller to compensate us for the delay?

  196. Colin Robertson September 25, 2015 at 8:33 am -


    I’m sure you could ask them to compensate you if it’s their fault and there are costs, not sure they’ll agree. Appraisal turn times can vary, hopefully it’s expedited.

  197. Colin Robertson September 25, 2015 at 8:37 am -


    A streamline will only allow you to resubordinate the second mortgage while refinancing the first mortgage.

  198. Jennifer Ledford September 26, 2015 at 11:30 am -

    I am currently in a lease till June and put a contract utilizing an FHA loan to purchase. To fulfill the obligations of my lease term, can I rent out my house after I close till the end of June satisfy the terms of my lease? I would move into the house in June as my primary.

  199. Colin Robertson September 28, 2015 at 11:54 am -


    FHA loans are limited to owner-occupied principal residences only, so they’ll expect you to occupy it as your primary residence. Maybe your landlord will be able to work something out with you to break the lease if you can find a new tenant for them.

  200. Doug September 29, 2015 at 6:27 pm -

    Colin, I am getting close to closing my FHA mortgage. I have two loans out to friends who are willing to pay back what they borrowed. It’s $2100 and $2700. Can I use the repayment in my downpayment? I have ledger with dates and amounts to verify. Do you see problem with me using as cash in my downpayment?

  201. NB September 30, 2015 at 10:58 pm -

    Hi Colin,
    I was qualified for a fha loan without my wife’s income although we filed jointly for the past 3 years.
    We need closing of 16K but we’re short 3k. Can she borrow from her 403b and gift it to me?
    Would the lender have a problem with this? LTV or wife gifting husband?

  202. Colin Robertson October 1, 2015 at 10:38 am -


    Best to ask your loan officer, but gifts are generally okay. Might also be able to structure loan with less closing costs.

  203. Colin Robertson October 1, 2015 at 10:47 am -


    The documentation may help, but you’ll need to run that by your lender to see if it’ll fly.

  204. Jamie October 8, 2015 at 1:59 pm -

    Colin, if I orginally live in my home and then decide to rent it out under the fha mortgage, will that be an issue? And if so what r the penalties?

    I’m ny resident, I’m sure it varies.


  205. Colin Robertson October 15, 2015 at 8:53 am -


    The FHA requires borrowers to establish bona fide occupancy in a home within 60 days of signing, and continued occupancy for at least one year. After that you can rent out of the home.

  206. Denise October 22, 2015 at 8:17 pm -

    I got FHA loan with Bank of America 10yrs ago. The loan has since been bought by Carrington Mortgage. My loan is assumable and my son wants to assume my mortgage (he would qualify) but Carrington says they will only refi my loan, in both our names and after 6 months he can apply for own loan. Or he can apply for a regular loan (incurring closing costs & down payment). There is equity in the home but I don’t any to “Gift” the money to my son so the bank gets it in the closing costs. I don’t want my name on the home anymore because my income has decreased significantly…(debt to income ratio). Son has been making the payments for over a year & should benefit from the tax right-off. How can I get my assumable mortgage to be honored???

  207. K October 24, 2015 at 10:49 am -


    I do not know how I stumbled here but your advice appears to be very sound. I really need help with all of my “friends” telling me what to do. I had a near “perfect” credit score less than five years ago. Maintained the same job for 13 years, had saved sizable amount of money and my home (currently worth approx. 250K) paid off. My father died and bequeathed everything to me which was, unfortunately an incredible amount of debt. I had a great estate attorney and we got through that. To try and make a long story short (which is a really long sentence :)) Having to leave my career, move to his town, pay his debt while maintaining my property, his property, his business (I was an abysmal failure at that), I spent my savings, my retirement, and blah blah but my credit became horrid. I’ve returned to my home and own four pieces of land. I am not employed and wish to move. I have found property that I want – asking price about half of the home I am in. No one will help me – due to unemployment and poor credit rating (mostly late payment of bills). I am very employable but do not wish to stay here any longer. I know this is not a short story but I am running into walls I never knew existed and am very shamed. Can I get an FHA loan, ANY loan to purchase the property I want, while this one is on the market? I expect it will sell easily as do the realtors that I have consulted. Thank you for your time and if you don’t respond – that’s ok too.

  208. maurice October 26, 2015 at 3:25 pm -

    Hi Colin,

    I’m going to paid off my FHA loan soon. my closing date is Nov 3 2015. Do I have to paid the total amount off the interest for Nov.


  209. Colin Robertson October 26, 2015 at 3:49 pm -


    The FHA doesn’t allow for partial month’s interest payoffs which is why it’s recommended to close around the end of the month to avoid paying interest unnecessarily.

  210. Colin Robertson October 26, 2015 at 4:08 pm -


    It’s tough to get a mortgage if you don’t have steady employment/income, though some lenders offer asset-based loans backed by Fannie/Freddie or portfolio loans (lender-based guidelines) whereby they use your assets as income to qualify. The hitch is that you needs lots of assets because they’re divided by 360 months (30 years). If you’ve tried lots of different lenders/brokers you may need to pay in cash, assuming you have cash.

  211. Colin Robertson October 26, 2015 at 4:47 pm -


    Generally a loan is assumed because the interest rate is low…I doubt the rate you got 10 years ago is lower than current rates, but if you want to keep the current mortgage (which also may not have mortgage insurance) to stay on track with the original payoff and pay it down that’s another story. If Carrington won’t help have you considered speaking to other lenders? Most lenders that have your existing loan don’t want to touch it unless it benefits them.

  212. dick October 30, 2015 at 1:21 pm -

    is it legal for me to accept a secret second from the buyer on a FHA loan

  213. Colin Robertson October 30, 2015 at 3:18 pm -

    Secondary financing should be disclosed at the time of application, see: https://portal.hud.gov/hudportal/documents/huddoc?id=4155-1_5_secC.pdf

  214. Alex October 30, 2015 at 11:57 pm -

    Hi Colin,

    I am hoping you might be able to answer my question regarding extra payments on an FHA loan. How are monthly interest payments calculated on an FHA if I were to pay extra payments at different times during the month. Can I only pay my extra payments at the first of the month?

    The reason for this question is I am trying to paydown my mortgage fast. I am thinking about refinancing from a 5/1, 30year arm at 4.875% I got in Oct 2014 to a 30 year FHA loan at 3.5% to lower payments despite the PMI. Oct 2015 marks the 3 year mark after a foreclosure that is the reason I got 5/1 Arm in the first place because the only lender who lend to me are portfolio lenders. And I cannot qualify for a 30 year conventional loan.

    Or are their FHA traps that I need to be aware of and just keep my 5/1 arm. I currently pay extra on the Arm to reduce the principal. In fact, on the 5th year of my arm I would be eligible to refinance into a 30yr conventional loan.

    Any insight would be much appreciated

  215. jose October 31, 2015 at 9:37 am -

    Hi I am a week away from closing on a fha loan already submitted my EMD and supplied all necessary documents. i submitted my lease of the property ive been renting for the last 5 years. on the lease the owner is listed and the realty company is listed with the phone number to realty company and the owners cell. For whatever reason the realty company number cant be reached and the owner told me he recieved a voicemail from the lenders he called back with reference number left to him. I pay through money orders and only have a couple moneyorder reciepts and walmart reciepts of money order purchases. I cannot give bank statements withdrawls because I always buy with cash and put the rest on my debit card. so my withdrawls will be diffrent everry month (will not be the same as rent). Can i loose my dream home because of this? like i said I have met all other qualification and supplied all documentation of everything else. Do not know what to do. please help

  216. Allen November 3, 2015 at 8:05 am -

    Collin, I purchased my home with an FHA loan in March of 2014. Since then I receive on a daily basis letters from “lenders?” telling me to contact them in order to lower my PMI, due to some new law. I usually see these as scams and do not contact. But is this real? Am I leaving money on the table?

  217. Colin Robertson November 3, 2015 at 11:39 am -


    There was a cut in mortgage insurance premiums early this year but that doesn’t mean it makes sense to refinance. You have to compare rates and also closing costs and consider what you plan to do with your mortgage (pay off or refinance again or sell).

  218. pam Stauber November 6, 2015 at 9:40 am -

    We are sellers..buyers are going FHA. We have not had our third delay in closing. Does the lender know up front what documents one needs in order to get the loan closed? We have had to come up with, what we feel, are documents that should have been dealt with at the beginning of the process. We are very frustrated sellers and are ready to withdraw the contract.

  219. Colin Robertson November 9, 2015 at 3:40 pm -


    Unfortunately, documentation requirements can vary depending on the borrower and what they send in, which may prompt further documentation. You’ll never know with absolute certainty what may come along during the underwriting process.

  220. cb November 12, 2015 at 2:55 pm -

    sorry, realized my last attempt at posting must have been a novel (maybe that’s why it’s not showing up?) – but basically my question is:

    as a seller, shouldn’t i have been told when my buyer went from pre-approved for a conventional loan with excellent credit, and in our contract agreed to 20% down – to weeks and weeks of delays now to find that final loan documents show it’s 100% financed?

    especially when we have a rent-back agreement that’s affected by his new, much bigger mortgage payment?

    and more especially because it looks like we’re going to lose our (contingent) new home – because our seller can’t wait anymore? loan docs got to title monday, he signed that night – still not funding today…. our buyer walks if we don’t close that sale tomorrow.


  221. Colin Robertson November 19, 2015 at 9:53 am -


    Not sure who would tell you about the buyer’s loan status to be honest. I’m assuming they’re doing their best to close the loan, even if terms changed (probably out of necessity).

  222. Elba November 24, 2015 at 2:25 pm -

    í just bought a house 3 months ago with a FHA loan, now I have to move out of Miami because the company is relocating me. Am I allowed to sell the house? is the a penalty or a limit time for it to be active?

  223. Colin Robertson December 1, 2015 at 11:58 am -


    FHA loans don’t have prepayment penalties so you should be able to sell the home without incurring any extra charges.

  224. Leslie December 22, 2015 at 8:05 am -

    I am in the middle of FHA financing and all of a sudden i’ve been told that there is a rule that if i’m already living in the house I am going to buy that I had to be renting it for 6 months before I can get an FHA loan. Now a conventional loan is the only option available. Does this sound right to you?

  225. Colin Robertson December 22, 2015 at 9:19 am -


    Sounds like an “identity of interest transaction” issue whereby the FHA requires six months in the home or the LTV is limited to 85%. May want to discuss with your lender if there are any ways around it if you don’t qualify for conventional.

  226. Laurie December 23, 2015 at 8:38 pm -

    I am going through Quicken Loans . In FHA underwriting now . Received a call today that I had a late payment in January 2015 on my prior FHA loan. They are asking for a letter of explanation I sent in the letter explaining the circumstances. I had rent in Houston and a mortgage in New Orleans, many repairs and a illness in my family that was very expensive. So I am hoping I want have a problem getting approved. I am putting 26000 dollars down on the house at 21000. Please give me some advice is a typical situation , also they told me my score is 644 and debt income ratio is 48% I make 70000 a year but ha email a car note of 704 a month and credit cards of 75 dollars a month please explain

  227. don lander December 26, 2015 at 12:21 pm -

    Hi Colin, Had a FHA loan thru Bank of America, Got into some finacial problems and they started to foreclose on me. BOA would not let me make any more payments so we applied for the HARP program. BOA played with us for about a yr than cashed in our FHA for $44,000 than sold our loan to Bayview Loan Servicing. In which they finished the HARP program and got us back in good graces. Was it legal for BOA to do this and not put that money towards our loan balance?

  228. Colin Robertson December 30, 2015 at 9:52 am -


    What do you mean they cashed in your FHA loan?

  229. Colin Robertson December 30, 2015 at 9:56 am -


    Each letter of explanation will be case-by-case with the lender…if they buy your excuse you’re good, if not, well, you’re not. Good luck.

  230. jason December 30, 2015 at 6:46 pm -


    Our current mortgage and title to our home is my wife’s name only. We purchased in Dec 2012 with an FHA. We are looking to refinance into an FHA 203k loan to add an addition to the home. We need to add me and my income in order to qualify for the amount we need. I have been told by one lender that I would need to be on the title for 12 months before we could pursue this as an option. Another lender states I can be added on at closing and do not need to be on the title prior to applying. The first lender also stated it was an FHA requirement the other lender insists that is not true. Can you shed some light on this?

  231. Colin Robertson December 31, 2015 at 11:46 am -


    Could be a lender overlay (requirement above FHA guidelines).

  232. Krista January 4, 2016 at 9:13 pm -

    Hi Colin,

    I am trying to apply for an FHA loan, but I had a short sale in June of 2013 due to divorce. Are there any circumstances that allow you to bipass the 3 year rule to applying for a FHA loan. Also when I purchased my home it was a Freddie Mac loan that went to short sale. Does it matter that the short sale was not a FHA loan? I did receive a $3000 relocation assistance check from the purchasers FHA lender. Does that matter?

  233. Melissa January 6, 2016 at 10:23 am -

    Hello Colin! Do you know if the Sheriff Deed on my foreclosed home is the date the 3 seasoning starts in order to apply for an FHA loan? Thanks!

  234. Colin Robertson January 6, 2016 at 11:35 am -


    It should be 3 years from the completion date or date FHA paid the claim.

  235. Melissa January 6, 2016 at 11:48 am -

    Thank you! Melissa

  236. Colin Robertson January 6, 2016 at 7:49 pm -


    Previous loan doesn’t matter so much as the one you’re going to apply for. You can see if a lender will consider your divorce as some kind of extenuating circumstance, but at this point you’re close to that 3-year waiting period and most will probably tell you to wait.

  237. Mary January 7, 2016 at 6:53 pm -

    I have a home I purchased with a FHA mortgage 5 1/2 years ago. I’ve tried to refinance twice, but the value has continued to decrease. If I just stop paying and walk away, what might be the ramification besides ruining my credit? Will they go after any future tax refunds? go after my paychecks? I was 1% off on my debt/income ratio the first attempt to refinance, and the second time one year later the value dropped too much and I was told I’d have to bring money to the table to refinance.

  238. Colin Robertson January 7, 2016 at 9:49 pm -


    A lot of bad things can happen…aside from ruining your credit you’ll have a waiting period before you can buy a home again, you will lose your home (obviously), potential tax liability, deficiency judgment, etc. It sounds like you’re close to getting approved for a refi, and if you like the home, you may want to speak with some more (different) lenders to see what options you’ve got. One may say no on the same day another says yes. Good luck!

  239. K mccan January 8, 2016 at 10:21 pm -

    Colin- I have an FHA loan on the house I live in now I’ve been here for almost 6 years now. But now I’m getting married and we want to buy a home together. But I’m not a first time home owner but he will be. Can we still apply for first time home owners together on a new home that’s still a FHA loan? Because I want to sell this house or rent it out and I didn’t know if that would be possible to have another loan. Even if the first loan only has my name on it. I don’t even know if I’m allowed to rent it out.

  240. Colin Robertson January 11, 2016 at 2:01 pm -

    K Mccan,

    The issue isn’t being a first-time home buyer. It’s tricky to get another FHA loan if you already have one, though there are exceptions for things like an increase in family size, which may allow you to qualify for another FHA loan. You may want to speak with some FHA lenders/brokers to see what your best course of action is.

  241. Gwen January 16, 2016 at 10:22 pm -

    when you receive a 2nd mortgage, which agencies receives the funds? Does it go to the 1st lender or fanniemae? Since the borrower does actually receive the money, is there an actual transfer of money from the 2nd Lender Bank to an entity?

  242. Rachel January 18, 2016 at 11:54 am -

    We signed a purchase contract for a home that we are renting. About one month prior to closing, they came back and told us that due to FHA guidelines we have to rent for a 6 month period. We have now decided that there are too many issues with the home and we are no longer going to purchase, not to mention our frustration with the fact that someone should have known about this stipulation. The realtor is telling us the sellers will need to “sign off” on our earnest money. The contract is expired now, but wouldn’t that stipulation basically void our contract anyway? I don’t understand how the sellers would have the power to “sign off” on our earnest money.

  243. Mike January 18, 2016 at 1:39 pm -

    5 years ago, I had a foreclosure on a second house and due to the 7 year rule, I cannot get a conventional loan yet. We are selling our current home and buying a new one. We are looking at have about having %25 down on new home, but it that doesn’t make the FHA max in this county.( would need 30% in this scenario to hit the cap)
    Can I do something like a 80/15/5 with FHA and a second?


  244. Stevie January 19, 2016 at 3:23 pm -

    Hi! Just got approved for an fha loan at about 590 credit score. Im going to meet the lender tonight. My question is what should i be asking her? I only got approved for a 200,000 loan at 1375 month for 30 years. I dont even know if thats a good deal?

  245. Colin Robertson January 19, 2016 at 5:56 pm -


    Your agent should know the various ways to you get your earnest money back and what contingencies were in place. Do some research on it as well so you know the rules instead of taking another person’s word for it.

  246. Colin Robertson January 19, 2016 at 6:09 pm -


    Might be best to speak with some brokers to see if they know of any options for a second behind an FHA loan. Or look into your state’s housing finance agency.

  247. Colin Robertson January 20, 2016 at 9:02 am -


    You would receive the funds from the bank where you got your mortgage. The mortgage then may be retained or sold and securitized.

  248. Colin Robertson January 20, 2016 at 10:00 am -


    Generally you just need to get approved for the loan amount you need, not anything extra. And getting approval with such a low score is nothing to scoff at. You didn’t mention the interest rate or other terms so it’s hard to tell you anything about how good of a deal it is.

  249. Jeffery Squires January 28, 2016 at 12:13 pm -

    Have you ever heard the term “FHA High Cost Loans (FHA Jumbo)”? If so is a FHA High Cost Loans any loan with a loan amount over 417,000 but under the county loan limit for that area?

  250. Colin Robertson January 28, 2016 at 1:00 pm -


    The loan limit floor for an FHA loan is $271,050, and applies if 115% of the median home price is less than 65% of the conforming limit, which is $417,000. If the loan limit is above the floor it is considered high cost.

  251. Jeffery Squires January 28, 2016 at 1:56 pm -

    So any loan amount over $271,050 is a FHA High Cost Loans?

  252. brett January 29, 2016 at 6:32 am -

    I currently have an FHA loan, if i was to pay this loan off via a loan from a parent, can i buy another home using FHA and rent out my first home?

  253. Colin Robertson February 1, 2016 at 10:16 am -


    Per HUD, an area where the loan limit exceeds the “floor” is considered a high cost area. How that may affect your rate/cost will depend on the lender.

  254. Colin Robertson February 1, 2016 at 11:18 am -


    Since the existing home would be free and clear with no FHA financing, you’d just need to show that the new home is the one you intend to occupy as your primary residence.

  255. Jesse February 3, 2016 at 2:38 pm -

    I have a strange circumstance with an FHA loan application. My husband and I found the house that we wanted to purchase, but we weren’t quite ready to close on a loan. We had a few credit issues to clear up. After making an offer on the house and agreeing to move in before the loan closes we went down to sign papers. We signed a contract for purchase and a lease purchase on the same day. This was November 1st. We moved in December 1st. Now we’re ready to get a FHA loan and my lender is telling me that he thinks it might be an identity of interest. But, the way that I see it is we did not have any business or tenant relationship prior to agreeing to purchase the home. I see it as a grey area on the identity of interest interpretation. I know that in order to be considered an identity of interest there needs to be a prior business relationship. But, we simultaneously signed a lease agreement and a purchasing agreement. Does this sound like identity of interest?

  256. Colin Robertson February 3, 2016 at 3:05 pm -


    You might be able to get an underwriter exception if you can back your story up and explain no prior relationship and intent to buy from the get-go but held back because of credit, not because a relationship subsequently formed.

  257. mike triolo February 5, 2016 at 5:48 am -

    Im in the process of buying a home with quicken loans. I got approved for a loan of 110,00 with a credit score of 622. 30yr fixed. with 4300 down payment. Everything has been going good. I have to more things to do. Provide additional assets for closing an let them know when the repairs are finished so the appraiser can go back out to check everything. Then i get a call saying my rent receipts are no good. I pay rent to my landlord with my daughters ssi check which is put on a debit card. I have to withdraw the money off the card an put in my landlords bank account. I provided 12 month rent receipts an 12 month transaction history from social security. I was told they wan’t good enough. I have no other way to provide proof of rent other than this. What else can i do? The repairs are going to be done on monday an the appraiser going out that afternoon. I let them know from the beginning this is how i pay rent an i was told its not a problem. Now it is an it could cost me the loan. What can i do??

  258. Colin Robertson February 5, 2016 at 9:33 am -


    Not good enough, or plain unacceptable? If it’s the latter you might be out of luck unless they grant an exception or you find a new lender.

  259. Cielito February 6, 2016 at 6:31 pm -

    Colin, I am Canadian working as a nonimmigrant in the US indefinitely on a TN visa. We’ve been staying with family but we will have to get into our own home in the next 60 days. Rather than throw away our money into rent, we would like to put 5% down on a $360,000 home. I know that as a non US citizen with less than 20-30% down that I have no other avenue but an FHA loan with the MIP. The kicker is that we will be saving $75,000 in 12 months. Can we refinance or do a streamline FHA without a major penalty in order to get out of paying the MIP?

  260. Beatriz Roman February 6, 2016 at 11:51 pm -

    Hello Colin,
    is it appropriate for my loan officer to suggest I pay the closing cost as negotiation, (she said this could help my offer for the house to get accepted)

  261. Colin Robertson February 7, 2016 at 11:15 am -


    They might be suggesting you don’t ask the seller to pay certain closing costs or ask for seller concessions to make your offer stronger?

  262. Colin Robertson February 7, 2016 at 11:16 am -


    FHA loans don’t have prepayment penalties, but make sure you actually qualify for a refinance into a conventional loan.

  263. Iris February 18, 2016 at 10:00 am -

    I have a large down payment, 25%, but a low credit score 637, would I be eligible for a FHA loan.

  264. Colin Robertson February 18, 2016 at 10:44 am -


    Possibly, it depends what else is going on with your job/assets/credit/etc. But if you have 25% down payment you might be better served with a non-FHA loan where you can avoid mortgage insurance altogether. Be sure to compare all options to determine what’s best for your situation.

  265. Chris February 19, 2016 at 4:02 pm -


    Very recent home purchase. Currently, I have a FHA loan but I want to move into a VA loan asap. (My condo which i just sold, was a VA loan). My current loan officer said I had to make 4 FHA loan payments before moving into a VA loan. Is this correct? I kind of took it at face value when he said it and I didn’t question it. Randomly, i talked to my old loan officer and that came up and he had never heard of it. I also tried to look it up but i’m not finding much info on that “rule”.

  266. Colin Robertson February 19, 2016 at 7:06 pm -


    Could it be an early payoff premium recapture that takes your loan officer’s commission if you refinance within 120 days?

  267. Ed February 22, 2016 at 11:55 am -

    About to close on FHA cash out refi. Previous loan was also FHA at the 2012 MIP rates. The lender is quoting the new loan at that 1.25% MIP rate. Shouldn’t the new loan be at the reduced MIP rate? Do I need the lender to request a new case number from HUD?

  268. Colin Robertson February 22, 2016 at 7:19 pm -


    Did you ask for clarification and reference the more recent MIP table?

  269. Stacy S. February 23, 2016 at 4:40 pm -

    I just refinanced my mortgage, went from an FHA to Conventional. No MI necessary any longer. However, the loan was paid off and closed on 2/16/16. It shows I made a MI payment on 2/2/16 however, they charged my escrow account again for MI on 2/22/16. When I called, they said it was for March and that the MI payment is a month behind. Does this sound correct?

  270. Gary February 26, 2016 at 11:21 am -

    Can you get a FHA loan for constructing a new home?

  271. Colin Robertson February 28, 2016 at 2:49 pm -


    Check out FHA OTC loan.

  272. Mouse537 March 2, 2016 at 10:43 am -

    I currently live in a paid off home too large for me to live in and which I share title with. The other owner will not sign it over to me.

    If I buy a smaller home through FHA, on my own, can I still use homestead exemption on the bigger home and claim primary residence on the smaller, cheaper FHA home where I will be living?

    Mouse in Florida

  273. Rob March 5, 2016 at 7:56 pm -

    What does my appraisal need to be if im buying house for 195,000 and seller is paying 4,000 in closing costs for me? That would make total sale price of 199,000
    The loan is a first time buyer fha loan

  274. Colin Robertson March 6, 2016 at 11:33 am -


    Whatever the agreed upon purchase price is, in your case it appears to be $199,000. The risk of doing this is that raising the purchase price requires the appraisal to come in at a higher value, which may or may not be an issue. Other options include a lender credit to cover closing costs, and of course paying costs out of pocket.

  275. Andrea March 10, 2016 at 9:45 am -

    We bought our house in August of 2010 as first time home buyers with a FHA loan. We are wanting to sell now, but we were told that we have to be in the home for 7 years before we can sell or be penalized. Is this true? Are there penalties or repercussions for selling after a little over 5 years?

  276. Jim Whitfield March 10, 2016 at 8:57 pm -

    Colin, I read thru an email from a well known lender that FHA could assist the buyer with some repairs after closing if the property was in need of those repairs. This sounds almost too good to be true. I’m a first timer buyer and don’t know about it. Help me out here if you can

  277. Colin Robertson March 16, 2016 at 10:18 am -


    Are you referring to an FHA 203k loan? If so, it’s nothing out of the ordinary.

  278. Colin Robertson March 16, 2016 at 10:22 am -


    Hmm. Maybe you received some kind of subsidized assistance via a housing finance agency (HFA) in your state? Is that the case? If so, check their guidelines regarding an early sale to see if there’s any potential penalty.

  279. Tracey March 16, 2016 at 4:21 pm -

    I had a short sale in October 2013 and am looking to buy again as soon as possible. Do I have to wait 3 years before I can even PRE-QUALIFY for an FHA loan? Or can I get pre-qualified before the 3 years is up as long as I don’t close on the property until after the 3 year mark?

  280. Susanne March 18, 2016 at 3:16 pm -

    I was denied a USDA loan due to my divorce not being final for a year and My ex husband and I have a car in both our names .. I provided divorce documents showing he is responsible for the payment and that he has made the payments for the past 12 months no payments were late. However USDA under new guide lines would not exclude that debt and denied my loan. What is FHA guidelines on that? Does FHA exclude that debt? I have a 685 credit score and I am also paying over the 3.5% down.

  281. Colin Robertson March 22, 2016 at 11:25 am -


    I suppose you can speak with lenders to see if you’ll qualify once the necessary time has passed so you’ll be ready to go if/when you finally apply.

  282. Colin Robertson March 22, 2016 at 11:59 am -


    You may want to reach out to some FHA lenders to see if it’ll be an issue or not.

  283. Heather April 5, 2016 at 5:54 am -

    My husband and I are looking at purchasing his Grandma’s house but it needs some minor repairs. We want to do the streamline 203k loan. Can we be gifted the equity for the down payment on this type of FHA loan if the house appraises for more than the total loan and renovation cost? Example; we purchase the house for $200k and the renovation costs would be $20k so the total loan would be $220k. If the house appraised for $270k can we be gifted the $50k difference as our down payment? Also, would the appraisal be based off of the pre-reno condition or post-reno condition?

  284. Colin Robertson April 6, 2016 at 10:52 pm -


    A 203k appraisal considers the value after the renovations are made, it’s an “as-repaired” appraisal. You may want to run your scenario by a few FHA lenders and/or a broker who specializes in FHA lending to determine the best approach.

  285. Margarita April 8, 2016 at 10:23 am -

    My husband and I are getting a FHA construction loan to build in our land. We are approved for a little more for what the house we are building. My question is are we able to get a big shop build with the remainder of the loan amount that we aren’t using? Can a shop be included in the loan?
    example house is $150,000, cost of a shop is $50,000= loan amount of $200,000

    Thanks in advance!

  286. Louise April 11, 2016 at 8:43 am -

    Hi Colin,

    My husband and I are looking to be 1st time home buyers. Our annual income is $163,210…I’ve been employed for over 18 years…same company. He has been retired almost 21 years…pension. Our debt to income ratio is 23. Our middle credit score is currently (627) if using FICO 8 (versus the mortgage scores – still confused by this). We would like to get a FHA (3.5 down). My concern is FHA states NO late payments in the last 2 years…ugh, we have had some. Do you think this will be a deal breaker since we are good in other areas? We have NO late payments now…haven’t had any in about 9 months to a year. Thank you in advance for your response.

  287. Colin Robertson April 18, 2016 at 10:38 am -


    You might be okay if it’s been a year, and your other good attributes should help your case. Probably best to speak with some FHA lenders to determine eligibility to be sure. And try to work on credit in the meantime.

  288. Colin Robertson April 18, 2016 at 11:36 am -


    May want to ask your lender directly…I don’t know what you mean by a big shop.

  289. LIsa April 27, 2016 at 12:35 pm -

    Colin, I too am a first time home buyer and would be using an FHA loan. Can you explain what this means exactly?

    “FHA 30yrs fixed at LTV of 96.5%”

  290. Colin Robertson April 27, 2016 at 1:51 pm -


    That means you get an FHA loan with 3.5% down payment…the LTV is the remainder of 100%, or 96.5%.

  291. LIsa April 27, 2016 at 2:25 pm -

    I was told not all homes are FHA approved, is there somewhere that I can see listing that ARE approved by FHA?

    Also, once pre approved, how is the apr set ? does that depend on the loan amount, credit score, etc?

  292. Colin Robertson April 27, 2016 at 6:23 pm -


    You will usually see in the listing the types of financing available, such as FHA. FHA is usually available on homes but sometimes not on condos because they require approval.

  293. Chris April 28, 2016 at 7:14 am -

    Hi Colin,

    I had plans to buy a home with a 5% conventional loan, but before the home went into contract, the outdoor HVAC unit was stolen. Since it is a HUD home and it was not under contract yet, they are telling me the home is selling as-is and I would have to replace it myself.

    Knowing that it may cost around $2500 to replace the HVAC unit, I am considering going with a 3.5% FHA loan instead to be able to afford the extra amount for the HVAC unit. My understanding is that my down payment will be less, but will it really be a huge difference considering the higher mortgage insurance costs? Also, will my mortgage be cheaper with a 3/5% loan rather than 5%?

  294. Colin Robertson April 28, 2016 at 3:06 pm -


    You should compare the costs and payments of each to see what’s best for your situation…I don’t know if choosing one mortgage over the other to purchase an HVAC system is the best decision. If one mortgage is much cheaper you might be able to recoup the HVAC costs over a relatively short period of time and wind up with a lower payment for the long haul.

  295. Frank May 16, 2016 at 9:17 am -

    I currently have an FHA loan and I am purchasing a new home that will also have an FHA loan. Can I still do simultaneous closing? I know you said that you can not have two loans at the same time but I would essentially be paying one off at the time of the closing?


  296. Colin Robertson May 16, 2016 at 12:07 pm -


    Yes, your loan officer should be able to facilitate this so it runs smoothly.

  297. Fabiola May 17, 2016 at 7:11 am -

    Can FHA loans be transferrable or being sold to another party/agency/investor……..

  298. Colin Robertson May 17, 2016 at 8:25 am -


    Yes, FHA loans are assumable, though rules vary based on when the loan was originated.

  299. Fabiola May 18, 2016 at 7:18 am -

    Thanks Colin,

    My husband just purchased the house 2 weeks ago, under an FHA Loan, we just got an e-mail from our Loan officer/company stating that they need to do a written work verification of employment because they need this so that they set up this file for mortgage monthly payment and to get this loan cleared and purchased. I am very confused as to what this is….

  300. Colin Robertson May 18, 2016 at 7:40 am -


    Just a document to verify his employment that they may have overlooked during the underwriting process so they’re able to sell the loan.

  301. Stephanie Hunley May 19, 2016 at 6:44 pm -

    We tried to buy a property with an FHA loan. But, three days before closing they informed us that we cannot get approved because there are buildings next to the property (not on the property we are buying) that they deem unsafe. I don’t understand how they won’t insure your property with home owners insurance because of another properties buildings.

  302. Colin Robertson May 23, 2016 at 8:45 am -


    I guess it depends what’s going on at those other buildings…if they are deemed hazardous for one reason or another it could make sense to not finance nearby homes, especially since FHA is more stringent than other agencies.

  303. Wen Cast May 29, 2016 at 7:34 am -

    We put an offer on a house and the seller is questioning our low 3.5% down payment. They are are also asking to get pre-approved with their mortgage person before considering our offer. Is this normal home buying protocol?

  304. David May 31, 2016 at 1:22 pm -

    Hi Colin,
    I completed a refi from FHA to conventional loan about 1 month ago.
    I had the FHA loan for 2 1/2 yrs.
    I was told by banker no PMI and found out later that it indeed had MIP and for life of loan.
    After getting conventional loan, I received my escrow money back with a letter stating that I should also receive money back on the FHA because it wasn’t more than 5 yrs old.
    Can you tell me anything about this?????

  305. Mike G May 31, 2016 at 5:54 pm -

    Hello, i wanted to know if my co borrower can take out a line of equity loan to gift the borrower in this case my dad?

  306. Colin Robertson June 1, 2016 at 8:12 am -


    This is one of the downsides of putting so little down, it scares the seller because they probably see your offer as weaker than those with more money down. The reason being that if anything goes wrong value wise, it may be difficult for you to still qualify, whereas the person putting 10-20% can adjust if necessary to save the deal.

  307. Colin Robertson June 1, 2016 at 8:28 am -


    You can check out this page, https://entp.hud.gov/dsrs/help/fhafacts.cfm, but if you go from FHA to conventional there generally isn’t a refund.

  308. Colin Robertson June 1, 2016 at 8:30 am -


    Using a HELOC for down payment shouldn’t be an issue, though the monthly payment will factor into DTI.

  309. Florence June 2, 2016 at 6:44 am -

    Good morning! Me and my soon to be husband are purchasing with an FHA loan. He has 5 months left to pay off his car ($651 per month). The loan officer says that the car must be paid off by closing to get the debt ratio into guidelines. My BFF who is a former broker says that with an FHA loan it would be disregarded because he has less than 10 months to pay. Which information is correct?


  310. Colin Robertson June 2, 2016 at 9:36 am -


    The FHA rule states that closed-end debts (such an auto loan) don’t have to be included if they’ll be paid off within 10 months AND the cumulative payments are less than/equal to 5% of the borrower’s gross monthly income.

  311. Faith June 6, 2016 at 11:16 am -

    Hi Colin,
    My husband and I bought a house last year but the loan is only in my name. When we go to purchase a different home are we still able to do FHA under him since it will technically be his first time buying a home? If so would I be able to be on it also?

  312. Edwin McPhww June 6, 2016 at 12:19 pm -

    Hello Collin,

    My credit score as of all last week was 534 due to my high credit utilization of 5800 out of 6500. Last Wednesday I paid off about 3800 on my credit cards and it brought my credit up to 615. i also have 6 last credit card payment. Now I’ve working with my current employer for about 9 months making 51k a year. I’m looking to purchase a condo for 100k in September and I’m looking for advice. Should I wait a little be longer to improve my credit status or do you think I will be able to qualify for FHA loan? i also have about 4,500 saved for a down payment.

  313. Colin Robertson June 7, 2016 at 3:02 pm -


    It might be possible but potentially complicated and it depends on a number of different factors. You’ll likely need to explain why you’re buying a new home and what will happen with the old home (rented out, etc.). You and hubby can’t both have primary residences if you live together. Check out the exceptions I wrote about in the article regarding a second FHA loan and if that might apply. There are also other low down payment options now that only require 3% down that might work. Might want to speak with a seasoned broker to determine best path.

  314. Colin Robertson June 7, 2016 at 3:06 pm -


    Your credit scores might keep rising as long as you keep paying down the balances…so you might be good there by September…also make sure your employment is for a long enough period…you said 9 months but hopefully previous work was in the same field so there’s continuity there. Good luck!

  315. Erica mccallister June 10, 2016 at 1:01 pm -

    While going through underwriting with fha loan they found a small debt that I have to get paid for approval. Can I pay this with cash or do I have to prove how I paid the bill?

  316. Nelia Gonzalez June 13, 2016 at 4:20 pm -

    Hi. We want to purchase a 2nd home as vacation rental & family use. Is that possible with a FHA loan? I spoke to a real estate agent who advised going this route. Both mine & my husband’s names are on our deed for our home. Your article touches on 2nd home purchases however this would not be a residence for us. Thanks!

  317. nicholas lagace June 17, 2016 at 7:46 am -

    question!? can you buy a property that has a single family home , and a manufactured home in the back under an fha loan?

  318. Lee June 24, 2016 at 3:01 pm -

    Question, How long does it take to get an exemption letter from FHA so that I can be approved for a new FHA loan if I meet one of the exemptions in the guidelines? I currently pre-approved for the loan, but now I am included on a foreclosure and now there is delay in my FHA loan. Background- Divorced 13 years ago, property awarded to spouse which at the time property was current. Property several years later are now being foreclosed on. Decree did not state for spouse to refinance or sell. Thanks in advance.

  319. Colin Robertson June 24, 2016 at 3:35 pm -


    No that would be an investment property if you rented it out, and even as a second home (vacation property just for you) it wouldn’t be eligible for FHA financing.

  320. Colin Robertson June 24, 2016 at 3:57 pm -


    Either way it’s generally smart to document paying off debts to ensure no one comes after you again for the same debt.

  321. Colin Robertson June 24, 2016 at 4:03 pm -


    Probably gonna be difficult, but you may want to run it by some experienced FHA lenders to see if there’s a way.

  322. Colin Robertson June 24, 2016 at 4:32 pm -


    Your lender may grant an exception and it may not take much longer than a standard underwrite, but it’s always hard to say with certainty because mortgages in general often get delayed and embroiled in all types of red tape. Best approach generally is to thoroughly explain situation upfront and find a lender that can tell you with certainty they can approve the loan to avoid surprises and wasted time down the line. Good luck.

  323. Lexi Lamas June 27, 2016 at 1:28 pm -


    How long do you need to stay at the property if it was obtained Dec 2014?

  324. Colin Robertson June 28, 2016 at 9:15 am -


    I don’t know what you’re asking. How long do you need to stay for what purpose?

  325. Jerome Allen June 28, 2016 at 3:15 pm -

    A have a Real Estate Agent looking for a home for me, but he says that because we have an FHA Loan, that it requires that the home be on the market for 3 months before the FHA loan can be used to pay for it.. Is that True?

    It doesn’t seem to make much sense.

    Looking for a Home in NYC Area

  326. Colin Robertson June 29, 2016 at 1:15 pm -


    I don’t really know what you’re asking. You already have an FHA loan and want another one? If so, you own a home and are buying another (selling the existing one?)?

  327. Jerome Allen June 29, 2016 at 3:05 pm -

    Yes we were Pre-Approved for an FHA loan.

    We Currently Rent a 3 bedroom apartment, so this would be our first home.

    The agent we are working with to buy a house is telling us that in order to buy a house with an FHA Loan, the house needs to have been on the market for 3 months.

    Does that sound right? What is the requirement of the home in order for us to purchase it with an FHA Loan?

  328. Colin Robertson June 29, 2016 at 9:35 pm -


    Was the property you want to buy recently purchased? Could be the 90-day anti-flipping rule, which can now be waived in certain circumstances.

  329. Tobie July 3, 2016 at 10:40 am -

    My credit score is only 631 so I do not qualify for IHCDA help. Is there any place that can help me with my down payment?

  330. Colin Robertson July 6, 2016 at 7:37 am -


    Possibly looking at non-FHA options that some lenders are starting to introduce that require little to down payment with the use of a grant and the Fannie/Freddie 97 program.

  331. Tracy July 13, 2016 at 1:11 pm -

    Is it a FHA guideline that a co-signer has to be living in the home with the main borrower or he cannot co-sign. Father trying to co-sign for daughters first home ( mobile home on an acre of land 20 yes old) Her credit is great but debt to income is off by 5%. Underwriter states it’s a new FHA guideline that he must be planning to live in the home in order to co-sign. He can co-sign on a stick built home and not live there, just not a mobile or manufactured home? Is this correct for Virginia FHA loans? Anyway around this? Thanks.

  332. Colin Robertson July 14, 2016 at 2:27 pm -


    FHA allows non-occupying co-borrowers in certain cases, but the particular lender might have their own guidelines. Have you asked around to see what other lenders can do for your situation?

  333. Brandi July 15, 2016 at 7:27 pm -

    Why does.the FHA not allow you to obtain a loan from a bank for the down payment?

  334. Colin Robertson July 18, 2016 at 11:26 am -


    The FHA doesn’t allow unsecured loans (non-collateralized) as borrower funds, but other sources like down payment assistance and loans secured by other assets may be acceptable.

  335. Dre July 23, 2016 at 1:18 am -

    I’m in an underwriting and today I received the disclosures from the Lender. I notice they asked for tax transcripts. I owe 2015 taxes just haven’t gotten a bill yet and haven’t made payment arrangements. Can this be issue ? Our broker is away and we have this dilemma. I don’t want to start a payment plan and make the lender feel that I’m trying to be sneaky.


  336. Colin Robertson July 23, 2016 at 10:21 am -


    If it were a tax lien or delinquent it could be an issue, but the lender may wonder why you haven’t paid them yet…do you actually need a “bill” sent to you in order to pay them? Are you delaying payment for some reason? Do you have the necessary funds to pay and still qualify for the mortgage?

  337. Colleen July 28, 2016 at 11:07 am -

    I have been trying to get an FHA finance to close for almost 4 months. The delays have been tax transcripts and flood insurance. Finally were able to work out the flood insurance issue. Now, the issue is back to taxes. My husband became disabled and for various reasons, we took a while to get our taxes filed – 3 years of taxes were filed at the same time (2011, 2012, 2013). We only owed on 2013 and they were paid. My husband passed away last year and we failed to get our 2014 taxes filed in time due to his illness. I just filed the 2014 and owe. My lender had told me that I only needed two years of tax transcripts – so I provided 2013 and 2014. I have not filed for 2015 yet. Now, he’s come back to me for the 5th time telling me that I have to have 2015 filed – no way around it. Is this true?

  338. Colin Robertson August 2, 2016 at 8:33 am -


    Your 2015 tax return is pretty important because the lender needs to know what you most recently earned (to qualify you properly) and also to know if a tax bill is due or not. If you got an extension you can ask if there’s a way around it using other documentation but at that point you might feel it’s easier to file.

  339. Maria August 8, 2016 at 7:00 am -

    Wondering if my husband & I should apply for a FHA loan or wait until our score is a bit higher. My credit score is 615 while his is 640..I have 3 medical accounts on my credit report that are over 2yrs old and was told not to pay them because it would hurt my credit score. My husband has 1 medical bill and 1 car repo from 2011 on his credit report that has been charged off. We both are rebuilding our credit and both have 2 credit cards that are in good standing with no missed payments. Would we be approved for a FHA loan? Should we pay the collection accounts?

  340. Luis August 9, 2016 at 11:38 am -

    Hi Colin,

    My girlfriend and I own a home 50/50 and she needs to move out of state for work reasons. I would be staying in the house. My question is how can I get the FHA loan we have all in my name so she can buy a house where she’s going to live? Ours is assumable, but how can I assume something I’m already part owner of? BTW, we have equity in the house and have paid always on time since January of 2013. Hope you can give us some ideas on this subject.

  341. Colin Robertson August 9, 2016 at 12:57 pm -


    Generally you’d refinance to remove one borrower from the loan while maintaining ownership of the property, but then you have to qualify for the mortgage on the original home on your own. Of course, this also means your girlfriend wouldn’t have to qualify for both mortgages when buying the new property. If you have sufficient equity a refinance may be beneficial and allow you to go with a conventional loan without having to pay mortgage insurance each month.

  342. Colin Robertson August 9, 2016 at 1:08 pm -


    Generally, getting credit scores above 620 means more lender options and lower interest rates. Perhaps someone can advise you on improving/cleaning up credit before applying to ensure you qualify and obtain a more favorable rate.

  343. Daniel Smith August 10, 2016 at 9:13 pm -


    I am currently going through a divorce. We have a FHA loan that my lender is going to let me assume to remove her name once I have the decree. However, I’m afraid now that I have a new job(within the last month, hardly any job history) and also probably a little higher DTI than they would like that I might be declined for the assumption. Can a friend “co-sign” the assumption to add more income to make it acceptable?

  344. Colin Robertson August 15, 2016 at 11:43 am -


    You may want to speak with your lender to determine how they qualify you for the assumption to ensure you in fact qualify, and if not, what your other options are.

  345. Derrick August 17, 2016 at 4:59 pm -

    Hey Collin,
    I currently have an FHA loan in MD, and planning to buy another house with my fiance using an FHA loan. I realize I can not have 2 FHA loans but I am wondering if we have to close the first loan before we can start the FHA loan process on the new purchase.


  346. Crystal August 17, 2016 at 9:31 pm -

    We are closing on our fha loan in two weeks,we were gifted 5k from my mother in law to pay off a debt in order to get approved for the loan. Will we still get approved if she took out a personal loan and gifted us the proceeds?

  347. Colin Robertson August 23, 2016 at 11:52 am -


    Good question…the underwriter will probably want a paper trail for the donor funds and they may scrutinize it further if it’s sourced from another loan, even if the donor isn’t a borrower for the mortgage.

  348. Colin Robertson August 23, 2016 at 12:04 pm -


    The new lender will want to know the original FHA loan will be paid in full to obtain the subsequent loan, should be condition on new loan so discuss with them beforehand so they can arrange it.

  349. Steven September 2, 2016 at 3:03 am -

    Hi Colin, your blog is amazing, thank you for being here for everyone.

    My fiance and I have found a house we want for 86,000. We have 6500 for closing/down/reserves that is seasoned 1 month(had the money in multiple accounts and cash until Aug 2). I have 1 account in collection that I am fighting. My credit score is around 640 and my fiances is around 700. It is a sale by owner deal. I am having issues getting approved. My current landlord is getting ready to raise my rent from 700 a month to 1000. I need this house as that rent is exorbitant for this area. I get so far with a lender and then communication seems to cease. Would my 1 collection account stop us from getting a loan? We are in Wisconsin and I have heard people suggest a FHA WHEDA loan or even a USDA Direct loan but had a lot of credit issues to clean up first; which we have done. What would be holding everything up?

    Thank you for your time,

  350. Colin Robertson September 8, 2016 at 9:06 am -


    Could be the collection, could be the reserves only being seasoned one month. Could be something else not mentioned. Have you asked what the specific issue(s) is? Best to get it straight from the horse’s mouth.

  351. Karen October 6, 2016 at 9:21 am -

    Hi Colin…

    I am considering refinancing my FHA loan by either doing a FHA streamline or switching to a conventional loan to reduce my interest rate and current monthly payment. I’m leaning more toward the conventional loan because it will reduce my payment the most by eliminating the mortgage insurance. If I switch over to a conventional loan now, can I obtain another FHA loan later while I still have the conventional loan? Are there any potential pitfalls I need to consider when switching from an FHA to conventional loan?

  352. Colin Robertson October 6, 2016 at 10:42 am -


    It’s pretty common to go conventional and drop the MI if you’ve got the necessary equity, so it makes sense. If you want to go FHA in the future, you’d have to make the old property a second home or investment property if you keep it. But that would be the case either way when buying another home with FHA financing and it would probably be more difficult if the loan on the original home is an FHA loan.

  353. Karen October 6, 2016 at 9:28 pm -

    Got it….thank you Colin

  354. Ritza October 7, 2016 at 11:48 am -

    I am in the process of finalizing my FHA loan. This is a first home purchase. I currently live in a single wide trailer that I own. I just received an email from my loan officer asking for proof of insurance for my trailer. I didn’t put any insurance since it was older and I only planned on living there for less than 5 years. Would me not having proof of insurance for my trailer stop me from completing my FHA loan? Just about everything else is done for the loan.

  355. Colin Robertson October 11, 2016 at 8:12 am -


    Not sure why it would if it’s not the subject property. You may want to ask the lender to be sure.

  356. Colleen October 14, 2016 at 11:20 am -

    The lender underwriter for my FHA refi is telling me that I have to have a declaration page for my flood insurance before they will close on the loan. I have never had to have flood insurance in the past, so I applied for it and was told it could be escrowed as part of my loan. I submitted the quote to them with all the details of the flood insurance – telling me it’s not good enough, that they have to obtain a dec page. My insurance agent is telling me that the insurance has to be paid in full before they’ll provide a dec page (FEMA rules – not theirs). I can provide a signed application with start date for insurance (do you think this will work)? I’m ready to pull my hair out….I’ve been trying to get this closed for 6 months.

  357. Colin Robertson October 14, 2016 at 4:19 pm -


    You’ll have to ask the lender – or just pay for the insurance to get the dec page…isn’t insurance refundable if canceled?

  358. Ryan Toya October 19, 2016 at 8:41 am -

    Our mortgage company is currently offering a no closing cost refinance and we are looking to refinance to combine a first and second mortgage at a lower interest rate of 3.65. The kicker is that I do not have enough equity in our home so the lender is recommending a FHA loan. My wife and I would like to sell our home in the near future but may not be able to do and are thinking if we refinance we could take advantage of the lower interest rate . By refinance to a FHA loan we would actually be increasing the amount of our current loan by about $5-6K because of the MIP up front cost. The loan specialist said that if we sell our home we would be refunded for what we’ve paid into it. Is this true? From what I have read we would be refunded starting at 80% after the first month after closing and would it reduce by 2 percentage points each month after that.

  359. Colin Robertson October 20, 2016 at 2:25 pm -


    Per HUD, the Upfront Mortgage Insurance Premium (UFMIP) isn’t refundable unless refinancing to a new FHA-insured mortgage within 3 years.


  360. Lee November 3, 2016 at 7:40 pm -

    I had an appraisal come in under the contract price. The difference is just over what I can come up with out of pocket.

    However – if I switch to a 203k there are some inexpensive repairs I can make which should (based on comments in the original appraisal) bump up the after improved value for more than the rehab costs due to the nature of the changes (it will cost very little to heat an existing unheated addition on the same heating unit as the rest of the house, thereby bumping up the Gross Living Area of the house.)

    My question is – does the existing appraisal get used for the as-is value in the 203k or does the purchase price get used? If it is the existing appraised value, would I still need to make up the difference? Or not, if the after improved value were over the appraised value? Or – is this at the discretion of the lender?

    If I change to a 203k with the same lender, does the FHA case number remain the same or does that change? The rules about when a FHA appraisal “sticks” and when it doesn’t are a little confusing to me – I hear that the appraisal sticks for 4 months, but that a new case number requires a new appraisal even within the 4 months.

    Then again – in 4 months the appraised value should go up in this market and/or I’ll be closer to being able to make up the difference. I have an agreement with the seller (my landlord) that would allow me to try again after that time was up if I can’t come up with a way to make it work this time around.

  361. James November 13, 2016 at 12:26 pm -


    I want to thank you for this website that shows both the how and why of FHA loans. My wife and I are looking into getting a house once I secure a full time job outside of University (yeah grad school) and this has been really helpful. I really appreciate the fact that you are answering people’s questions over the years.


  362. Colin Robertson November 13, 2016 at 6:37 pm -


    Thanks for the kind note and good luck with your home purchase!

  363. Mister K November 19, 2016 at 9:47 am -

    Under 15 U.S.C. § 1681 c, negative information over seven years old may be reported by CRAs for a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more. How does that exclusion actually perform in a real-life situation, if the purchase amount is $137,000? Or does it relate to the actual mortgage amount (including interest)?

  364. Ilene November 21, 2016 at 9:16 pm -

    Hi Colin, I hope you can answer a FHA question?? I sold my home w/a rent back contract giving me up to 45 days to stay & pay $100 a day … Well when Mortgage Co was PIF up until 11/30/2016 doesn’t rent back start 12/1/2026?? Or does rent back start day of escrow?? Please advise

  365. JB November 25, 2016 at 6:13 pm -

    Hi Colin,
    My wife and I are preapproved for an FHA loan. We have already provided 2 months worth of bank statements, paystubs, w2s, proof of down payment etc. We are continuing to put money in to our savings account(separate bank) which is withdrawn from our main bank. In process of doing this we had a miscommunication. We withdrew too much which caused a negative balance ($8) and nsf fees. We redeposited the money and begged the bank to return the nsf fees. They did but the nsf fees, negative balance and nsf fee return still show on our statement. Would this be something that would prevent us from continuing forward or would we be able to explain this to underwriting?

  366. Colin Robertson November 28, 2016 at 4:12 pm -


    Might (hopefully) just be a Letter of Explanation (LOE) from you to the lender to clear things up.

  367. Ally Day December 28, 2016 at 2:34 am -

    Great work. I really appreciate the insight here in this post and confident it’s going to be helpful to me and many others. Thanks for sharing all the information and tips.

  368. M. Wilson January 3, 2017 at 1:03 pm -

    Hello, when a condo is not approved FHA because of the ratio of owner occupants vs. tenant occupied; what is the exception rule that states you CAN use FHA financing when the property is a HUD foreclosure?

  369. Colin Robertson January 3, 2017 at 4:26 pm -

    M. Wilson,

    Potentially HUD 4155.1 4.B.4.b FHA-Insured Mortgages on Investment Properties

  370. F s January 5, 2017 at 12:33 pm -

    Hello, I’m trying to get a FHA loan but more credit score is @ a 599 @ the moment. Any lenders that can help? Looking to move fast since my lease is up 01/31/17/ Location Dallas TX

  371. Colin Robertson January 5, 2017 at 1:19 pm -


    It’s possible to get an FHA loan with a 599 score, but you may want to work on improving it to score better pricing and expand your lender options…even getting it above 600 can help. Good luck.

  372. Kelly Browning January 6, 2017 at 11:12 pm -

    I’m trying to do a refi and was approved by underwriting but when they entered the info into hud system and old case number came up from a house that I sold in 1991. Hud says I have to contact the company that held my mortgage. Unfortunately they have been out of business since 1993. So basically hud won’t help me to remove this error so I can close my loan. I don’t know where to go or start. I’m so stressed by this.

  373. Colin Robertson January 9, 2017 at 10:09 am -


    Ideally your loan officer can sort that out for you if they want to earn their commission.

  374. Anthony January 14, 2017 at 8:40 pm -


    First off, thanks for continually providing everyone with information even though this article is from 2013. You’re the real MVP. Anyway, my question is how long does one have to own the FHA loaned home before one can sell it?

  375. Colin Robertson January 15, 2017 at 12:15 pm -


    There are no prepayment penalties on FHA loans so there is no time limit, seasoning period, or penalty to sell.

  376. Sean January 17, 2017 at 9:30 am -

    My wife purchased a home with an FHA loan prior to our marriage about 12 years ago. We just did a conventional refi last year in my name. We’re now selling the house and looking to buy in another state. Even though I’ve never bought a home myself, am I still eligible for an FHA or does the refi disqualify me as a first time buyer?

  377. Colin Robertson January 24, 2017 at 9:16 pm -


    You don’t have to be a first-time buyer to get an FHA loan, but the property you’re buying has to be owner-occupied to get FHA financing.

  378. Monique February 8, 2017 at 11:17 am -

    i was speaking with my loan officer to get approved for the FHA Loan which i was approved with 3.5% down. She advised me not to spend any of my tax return at all to have it for the FHA loan. My question is do i need to put a down payment into escrow even thou i have not really started looking & if it takes me a yr or more to find a place it is sitting there building interest no on my side, how does this all work

  379. Colin Robertson February 8, 2017 at 1:40 pm -


    They probably just mean setting the money aside in your checking/savings account and not spending it so you have seasoned assets/reserves on hand if and when you find a suitable property.

  380. Michael February 9, 2017 at 2:05 pm -

    can you get a fha loan without owning property? loan on a mobile home. have about 20 percent down.

  381. Colin Robertson February 15, 2017 at 2:08 pm -


    There are a lot of rules regarding mobile homes and FHA financing, one stipulating that borrowers aren’t required to purchase/own the land on which the manufactured home is placed.

  382. Anthony March 2, 2017 at 11:20 pm -

    I currently have a FHA loan on a 2 unit house. I am now refinancing to a conventional loan. So i am now looking for a new primary residence , i was told by my mortgage company (Quicken Loans) that i can use FHA on my 2nd home but it can only be a 2 unit home, but i was interested in a 3 unit home.. is that true?

  383. Colin Robertson March 3, 2017 at 10:12 am -


    Hmm. Did you refer to the new primary residence as your “2nd home?” It would need to be your primary, as you stated. It could be a lender overlay or a reference to you needing more reserves to qualify when it’s a 3-4 unit property. There’s also an FHA 3-4 unit self-sufficiency test. May want to seek clarification as to why Quicken can’t do it.

  384. Buckeye March 6, 2017 at 12:15 am -

    My husband and I were just told that we qualify for an FHA loan for a home cost of $200,000, MI, and property taxes of $600 a month for a total payment of $1720 with 3.5% of the $200,000 down.

    We have been renting the last 8 years and the owners of this home informed us that they are putting the home on the market at the end of our current lease which is 5/1/17, but that we have the first option to purchase this home for $200,000 without having to move out if we close by 5/1/17.

    The real estate agent that had the house listed 8 years ago when we moved in has been out local “go between” for repairs/issues with the house as the elderly owners live in England after they moved from the house we are currently living in 8 years ago. The real estate agent referred us to the mortgage broker who pre-approved us for a loan, although we have said for the past year that we have known that we would either have to purchase this house or move that we were opting to move as circumstances have changed with this house since we first moved in 8 years ago (annexation issues with the city and a nightmare of a neighbor) that staying here is not desirable.

    The mortgage broker, even though I informed her that our intent was to shop for a house not purchase the one we were in, just happened to quote our pre-approval for the exact asking price and monthly property tax amount of the house we are in and not wanting to buy, so I feel like I am being a bit set up to purchase this house between the real estate agent and mortgage broker whom they each have stated that they know each other very well and work together often, so I am not very trusting in the response I would receive if I were to call and ask. While I know they have ethics rules they are to adhere to I also know that shady things do also happen, so I am skeptical.

    My question is this, since property taxes are paid in with the mortgage as a part of the pre-approval, if I find a different house that is $225,000 but has property taxes that are only $400 a month instead of $600, which actually makes my total monthly payment a little lower would I be able to actually purchase the $225,000 home even though I was only pre-approved for $200,000 since the lower taxes actually makes the overall monthly payment slightly lower.

  385. Colin Robertson March 13, 2017 at 7:19 pm -


    It depends what your pre-approval included in the way of property taxes…basically look at the max PITI it allows for and also the down payment you’re capable of, etc.

  386. Lisa March 18, 2017 at 4:35 pm -

    I am about to close on a home next week with an FHA loan. They are now asking me to pay my personal taxes upfront even though the IRS has scheduled payment arrangements for this year. The amount owed is under $2000. My credit score is 710 and I’m paying half of the closing costs, with 4% down.

    Is this common?

  387. Colin Robertson March 19, 2017 at 12:58 pm -


    Hmm…you may be required to make at least 3 months of timely payments on the IRS debt in order to leave it unpaid. May want to ask your lender for specifics.

  388. Kelly April 8, 2017 at 3:00 pm -

    Hi Colin, my FHA mortgage was approved. Because I am in a different state I signed all the closing documents in the presence of a mobile Notary and my down payment money was wired to the title company (this was all done yesterday). My realtor called me today to let me know that the seller is having issues obtaining a loan for his new home so I am afraid he may back out. My question is: do i need to go through the whole loan approval process again if I find a home the cost the same amount or lower in a reasonable time frame?

  389. Colin Robertson April 9, 2017 at 2:35 pm -


    If you’ve worked with a lender previously, they might be able to use some of your old documents again. But you’ll still have to sign new disclosures, get a new appraisal (if it’s a different house), update a lot of things like bank statements that age quickly, and so on. It might be slightly easier and fresh in your mind as to what you need to provide, but still a bit of work.

  390. Tywana April 23, 2017 at 12:29 pm -

    I have a question. If I’m approved for an FHA loan, who is authorized to live in the home? Can my husband live with me even though he’s not on the loan? I live in Texas.

  391. Colin Robertson May 1, 2017 at 10:52 am -


    Sure, the loan is just who is liable for repayment on the loan. The issue you might be thinking of is occupancy, whereby the borrower on the loan must reside in the home.

  392. Chris May 10, 2017 at 6:38 pm -

    HI Colin,

    I was told that an additional .8% would be added to the 3.75% I was quoted for pmi. I was also told that I would have to keep that on the loan for 11 years and then it would fall off and only be the 3.75%. Can I request it to be removed if my LTV got to a certain point? Or am I stuck for the 11 years? Thanks!

  393. Colin Robertson May 11, 2017 at 8:31 am -


    The only way to get it off sooner would be refinancing away from the FHA assuming you could get a new LTV of 80% or less.

  394. Roy Fisher May 21, 2017 at 8:11 am -

    There’s still something I can’t find a definitive answer to. FHA is an insurance that I pay guaranteeing the lender will get their money (even though my home is the guarantee). If there was a default how does it work? If I’m paying insurance to FHA and default do they pay the lender and my home is paid for (after all this IS insurance) or what happens? Seems like I’m paying for insurance that’s not really insurance. I didn’t get 100% ltv on my home which means the lender would get their money back if they foreclosed. The lender only gave me about 80% of the value of my new home which means if I default they’ll have their money. For instance if I own a $200,000 home, I borrowed $130,000, paid $10,000 then defaulted ($120,000 bal) and for some reason it brought $80,000 at auction or whatever would they (fha) only pay $40,000 and I still lose my home. Why would they call it mortgage insurance if I still lose my home after paying premiums?

  395. Colin Robertson May 22, 2017 at 7:30 am -


    My guess is most people that go FHA put down the minimum 3.5%, which after accounting for foreclosure fees won’t come close to covering the outstanding loan balance once sold as a fire sale. As you probably know, this insurance is in place for lenders, not borrowers, which offer low-down payment loans to homeowners in exchange for this protection. It’s not in place to protect borrowers if they can’t pay the mortgage. If a borrower does happen to put down 20%, often it’s not with the FHA, and doesn’t require mortgage insurance.

  396. Marcelli July 1, 2017 at 1:12 am -

    Hello, i have been at my home for about 12 years, i have an 80/20 loan with a flexible mortgage and a BALLOON attached to it! It is our first home and i didnt know what a balloon was and we have paid a measley 1500 in 12 years into the principle!! Then we got behind for a year and i decided to sign up for a modification and they told me if approved they would take off the balloon AND all the past late payments on my credit! Well neither was done and my balloon is up in about 2 years now and my score is only 614 and 643 after cleaning my credit! What are my options!! I need fast help!

  397. Colin Robertson July 7, 2017 at 12:10 pm -


    If you have two years before you absolutely have to take action, you may want to keep working on your credit scores so you can obtain a refinance at a reasonable rate, assuming you meet all other mortgage eligibility criteria like income, assets, appraisal, etc.

  398. Amy July 12, 2017 at 4:03 pm -

    Hello, I am not wanting to live in my house anymore. My insurance company is going to drop insurance because I can’t afford to fix the roof and gutters. My credit is bad and can’t get a loan. There are other problems with the inside of the house that I can’t afford to fix. I have a first time home buyers loan, if the house goes into foreclosure, what will happen. I live in kansas

  399. Mindy July 13, 2017 at 4:18 am -

    I got into an FHA three years ago. The housing market has since come up considerably. I have a manufactured home (not a trailer-no axles and on a foundation) on property. Everyone keeps contacting me to “stream-line” the mortgage. By the time you pay FHA the 1.75%, appraisals and closing costs the new loan amount come in much higher than the original mortgage price. Even though there is now easily 20% equity.

    Is there other, Private, mortgage companies that refinance manufactured homes or is FHA the only option I have? I would like to lower my payments and reduce the interest rate.

  400. Colin Robertson July 14, 2017 at 12:45 pm -


    Have you considered selling it to avoid foreclosure? The market is pretty hot right now so it’s possible you might be able to unload it without hurting your credit. Not sure the first-timer aspect will have any effect, good or bad. Good luck!

  401. Colin Robertson July 14, 2017 at 12:50 pm -


    If you have 20% equity, you can certainly try going the conventional route (Fannie Mae or Freddie Mac) instead to avoid the upfront MI and the monthly MI. Might want to start shopping around to see if they can do better than FHA.

  402. brad August 3, 2017 at 9:53 am -

    my wife and i are in process of buying a house. when we applied for the loan the bank told us her income would be used. now that we are 1 wk from a 2nd closing…1st one had to be rescheduled, they “decided” not to use it. she has a low score because of bad car accidents which led to a lot of medical debt. with my debt im at just under 45% DTI. they said we have to be at 43%. with her income i know it wouldnt be a problem. can the bank just decide like that and put it all on me? the credit cards we have are in my name and bank says we cant go any farther keep in mind 1 week from closing, if those are paid off…$3100. can that be added to the loan?

  403. Colin Robertson August 3, 2017 at 11:00 am -


    They might be structuring it that way to save the loan because you may not qualify otherwise. Her low score combined with her debt might jeopardize the loan, but that’s something you can discuss with your lender directly.

  404. Mable Kirby August 9, 2017 at 8:01 pm -

    my marriage ended after over 40 years. I am in my late sixties. I want to buy me a home but my ex let our house go into foreclosure without my knowledge. In our divorce decree he was allowed to live in our home while it was up for sale and make the payments but he didn’t. I wasn’t aware of this until the sheriff department served me papers. Is there anything I can do. Is there any kind of program that can help a elderly woman to purchase a home.

  405. Colin Robertson August 11, 2017 at 12:35 pm -


    It’s possible, but they’ll have to consider your payment history and income/assets. You may want to reach out to a mortgage broker who is knowledgeable about a variety of loan programs, as opposed to a bank rep who may not know much more than what their own bank can offer. Good luck!

  406. Jenifer August 12, 2017 at 7:03 am -

    I am planning to purchase a home that is owned by a family member. I’ve been told that I would not need to have the down payment or closing costs to complete the loan paperwork. Can I still finance the house through an FHA loan under these circumstances?

  407. Colin Robertson August 17, 2017 at 11:14 am -


    The FHA has what’s called an identity of interest transaction, which is defined as a sale between parties with family/business relationships. In those cases the LTV is limited to 85%, meaning a minimum 15% down payment would be necessary. The exception is if the borrower has been a tenant in the property for at least six months predating the sale.

  408. Jes August 30, 2017 at 11:35 am -

    I am looking to purchase a home and was looking into the down payment assistance program in FL but my middle score is only 610. So I am considering the FHA option. If I get a personal loan for the down payment, would it possibly affect my score more than 30 points? Also, I’m just looking for overall guidance in my options for obtaining the down payment.

  409. Colin Robertson August 30, 2017 at 12:32 pm -


    The FHA doesn’t allow personal loans, aka unsecured signature loans, as an acceptable source of funds. And as you mentioned, it could lower your credit scores even further. If using a loan, it would need to be collateralized, meaning secured by an asset. Alternatively, you could look into a grant or a gift for down payment.

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