|A lender must follow FHA rules and regulations during and after the closing of a loan insured by the Federal Housing Administration. The approval of a mortgage is subject to the guidelines issued by the Department of Housing and Urban Development and a borrower must meet these guidelines to qualify for an FHA-insured loan program.
There may be different rules for different financing situations, and so the down payment and closing cost requirements may vary from case to case. The loan limits are certainly different for different locations and also there are separate sets of rules for mortgage insurance, condos and bankruptcy, and on short sales, renting, foreclosure and flipping.
FHA Rules 2011
The most important change brought by the Department of Housing and Urban Development is in the FHA rules regarding credit score. According to new regulation, the minimum credit score to qualify for most loan programs is set at 500. Prior to this change, lenders had a freehand in setting their own credit score requirements. They still have this flexibility but now you can hardly find a lender who can accept a credit score lower than this minimum.
The FHA loan is popular because it requires a very low down payment, which is as little as 3.5 percent, to close a mortgage. To qualify for a 3.5 percent down payment, a borrower must have a credit score of 580 or more. Other requirements to qualify for a loan under FHA mortgage insurance program include a front-end, debt-to-income ratio of not more than 29 percent and back-end ratio of maximum 41 percent.
FHA also keeps on updating its rules regarding short sale, bankruptcy and foreclosure. These policy updates are being made available through one or the other mortgagee letters. You can find the one relevant to you on the website of the US Department of Housing and Urban Development. You can also find useful information regarding the same on our website fha.realestatezing.com.
For FHA rules on renting subsidized apartments, you should contact the Multifamily Housing Clearinghouse. To reach the Multifamily Clearinghouse by phone, call 1-800-685-8470 from 9 am to 5 pm ET. There have also been changes in FHA streamline refinance guidelines. One key revision is regarding the seasoning requirement, which must be minimum six months in order to get a case number assigned to a streamline refinance transaction.
For more on changes in FHA rules regarding flipping, short sale, foreclosure, PMI, condominiums and so on browse fha.realestatezing.com or visit HUD website.