Frequent FHA Loan Questions

The Federal Housing Administration is an agency of the federal government. The FHA insures private loans issued for new and existing housing, and for approved programs for home repairs. The FHA was created by Congress in 1934, and in 1965 became part of the Department of Housing and Urban Development's Office of Housing. The FHA's mission in the present day includes offering help borrowers get the amounts they qualify for, and to assist lenders by reducing the risk of issuing loans. To get situation-specific information and advice on how you might be able to take advantage of an FHA-insured loan, you'll need to contact an FHA lender to get started. You can search for an FHA lender near you at HUD

The FHA recommends a Consumer Credit Counseling program for anyone who fears being denied a loan as a credit risk. You should, as a rule, be in a satisfactory payment situation for at least one year before applying for any FHA loan program. Your credit counselor can address issues such as income-to-debt ratio, how to maintain satisfactory payments for the required time and challenging unfair or erroneous entries on your credit report. It is very important to approach any FHA loan with an improved credit rating if you have had trouble in the past.

The FHA will ask for a lot of information, which will go on your loan application. Be sure to ask your loan officer for a complete list of required data and give yourself plenty of time to gather the information. You will need to provide the FHA with a wide range of details; this includes all the addresses where you have lived in the previous two years, your employers name and addresses for the last two years, plus the amount of your Gross Monthly Salary. If you have had multiple jobs over the last twenty-four months, you will need your W2s for all of them. You will also need your income tax forms submitted for the last two years. If you don't have copies of your W2s, you should contact your employers for assistance. If you need replacement copies of your income tax returns, go to IRS' site and follow the instructions on how to order replacements. A tax transcript is free of charge, and copies of actual tax returns cost thirty-nine dollars.

Veterans are required to submit the DD Form 214 along with their FHA application paperwork. The DD Form 214 is the official record of discharge from the Armed Forces. If you have recently separated, retired or otherwise left active duty and don't have your DD Form 214, you will need to request a copy from either your final outprocessing base (call the orderly room, records office or outbound assignments/outprocessing office), or request the form electronically from the Department of Defense. Click here to learn how to request a copy of your DD Form 214, or contact your nearest Veteran's Administration office. Once received, submit the DD Form 214 in the same package with your FHA application.

Do you have an FHA loan or HUD insured mortgage? In certain cases, if you paid an "up-front" mortgage insurance premium at the closing of your house and did not default on your mortgage payments, you may be eligible for a refund on part of your insurance premium. Loans granted after September 1, 1983 may be entitled to this refund. If you aren't sure whether you paid an upfront premium, check your settlement paperwork or phone your lender to learn more. If you believe you are eligible, you can check the HUD database by clicking here and following the instructions on how to check online. You will need your FHA case number to perform the search. If you need further assistance, contact your FHA loan officer for help.

The 203(b) fixed rate loan is the most popular FHA home loan, especially among first time home buyers. If you have never purchased a home before, you may wish to consider the 203(b) FHA loan—it keeps your downpayment to a minimum. Your closing costs may also be reduced. The 203(b) FHA loan will finance up to ninety-seven percent of your loan. There are some debt-to-income rations you’ll be required to adhere to, but the 203(b) does not have a minimum income requirement. If you are unsure about your debt-to-income ratio, check with a financial planner or discuss your bills with a lender to see how you can maximize your standing with credit reporting agencies. Your FHA loan experience will be greatly enhanced by doing so.

FHA loans do not come directly from the FHA. Instead, the FHA is in the business of guaranteeing loans—reducing the risk to lenders and offering increased borrowing power to qualified applicants. This power includes getting better interest rates thanks to the FHA home loan insurance. FHA loans are particularly helpful for people just out of college who want a home, but have little or no money saved for a down payment. The FHA loan is also a good bet for newly married couples, and also those who have had credit problems in the past because of foreclosure or bankruptcy. You can get a wealth of information from a qualified lender, but the first thing you should do is to check out your credit rating and get a list of lending limits for FHA loans in your area. These limits vary from state to state, and may even vary by county depending on where you live.

There are many factors you will need to pre-qualify for an FHA loan. You should be able to demonstrate employability, job stability and reliability. This reliability includes holding a steady job for at least two years with the same company or employer and increasing or at least consistent income. Any foreclosures on your record should be at least three years old. The same applies for bankruptcy. The FHA loan bottom line—make sure you can demonstrate that you have been a good risk for two years or more and you will have a much better chance at pre-qualifying for an FHA loan.

A HUD press release at the beginning of 2006 announced a nearly thirty thousand dollar increase in the amount of FHA insured home loan money available to borrowers approved for loans on single-family home mortgages. Five years earlier, qualified applicants for such loans could only borrow around one hundred thirty two dollars. This increase in availability means more borrowing power for those applying for FHA home loans, and lets more people than ever have the chance to own a home. With only a three-percent down payment and a single-family home mortgage limit creeping closer than ever to two hundred thousand dollars, now may be the best time for you to apply for an FHA home loan. Take a good look at your finances before you proceed; your monthly housing costs should not take up more than 29% of your gross monthly income. Some people make the mistake of calculating their housing budget using net income, which won’t help you when it comes time to apply for an FHA loan.

There are many ‘reasonable and customary’ fees that may be charged to the borrower for any kind of home loan. These fees can include appraisal fees, inspection fees, credit report fees, document preparation fees and other charges. You should ask your lender up front for a list of known fees in connection with your type of FHA insured home loan, FHA streamline refinance or other transaction. You should be provided with a full accounting of what you are expected to pay, when, and how it affects the bottom line of your loan.

It’s true, there are fees included in the processing of some loans that are not directly related to closing costs. Some of these include courier fees, wire fees, real estate broker fees, recording fees and recording taxes. Depending on the nature of your FHA loan, you may be eligible to get state or local assistance for some or all costs related to home buying. Ask your lender what programs are available to you in your state for additional financing, grants or ‘forgivable’ loans. You may be surprised at the help you can find at your local level when seeking an FHA mortgage!

There are a set of payments, fees and other charges that are illegal. If you are seeking an FHA loan, do not pay any ‘unearned fees’. These can include a fee paid above and beyond the level of service, a kickback, fees charged for a service that was not delivered or that was different than the service paid for. FHA guidelines are not the sole regulation of these kinds of illegal fees—federal, state and local laws all prohibit some or all of these costs. If you feel you are being asked to pay a prohibited fee or cost, check with the FHA, or contact a housing counselor immediately to get advice, or consult a lawyer with expertise in home lending. Your FHA mortgage is designed to get you into a home for a fair price; you should not be required to pay above and beyond the normal fees associated with buying a home.

There is one major mistake potential homebuyers can easily make when applying for an FHA home loan; a major credit purchase. Don’t cloud your debt-to-income ratio with a big purchase before closing on your home! Remember that your debt-to-income calculation is based on your current debts and the percentage of that debt to the amount of money you have coming in. Any major credit purchase will seriously alter the balance—sometimes enough to weigh against you when it comes down to FHA loan decision time by the lending institution. In fact, if you can afford to pay off your current auto loan before applying for an FHA loan, it may be a good decision. Don’t put yourself at a financial disadvantage to do so, but if you are able, getting rid of any debt on your record will help when you apply for the FHA loan. As always, if you have any doubts at all, consult a financial planner or ask your lender for advice.

One of the most important aspects of getting your credit rating in shape before applying for an FHA home mortgage is time. If you believe your credit is in poor shape, you’ll want to establish payment reliability over a period of at least one year before starting your FHA loan paperwork. Another smart idea is to eliminate your debt potential. If you have multiple credit cards, try to pay them down and get rid of one or two of them. This can improve your credit rating by showing you have less potential debt waiting to happen. The FHA loan process hinges on a good credit report. If you have erroneous items on your credit rating, challenge them in writing with the major credit reporting agencies. Be sure to get resolution before you begin work on the FHA mortgage. You may need several months to clear up contested entries on your credit report—its best to begin the contesting process early.

FHA mortgages are insured to protect lenders in case of a default on the FHA loan. An FHA mortgage is advantageous to the borrower because of the reduced cash investment needed to close on a home. The FHA mortgage is possible in part because the FHA is funded solely from income it creates itself. The FHA is not funded by tax dollars, but from the revenue generated by FHA mortgage insurance. This cost is borne by the homebuyer, but the insurance cost ends approximately five years later, or when the FHA mortgage balance is seventy-eight percent of the property value, whichever occurs last. Other home loans have more stringent requirements, but FHA mortgages have flexible payment schedules and more inclusive definitions of monthly income. All of this may be quite confusing to a first-time homebuyer. If you aren’t sure why an FHA loan may be right for you, ask your lender to do a side-by-side comparison between the FHA mortgage and the current non-FHA versions. It will soon become apparent which is the best value for your money, especially if you don’t have a lot to invest in a down payment.

Streamlining your FHA mortgage refers to a particular kind of refinancing plan. There are costs involved as in any refinancing, and an FHA mortgage must meet certain requirements before it can be streamlined. One of the most important of these requirements; your FHA mortgage must not be delinquent. Timely payment is the key, as with any loan application. Your mortgage must also be currently insured by the FHA, and the purpose of the streamline refinance should be to lower your payments and monthly principal. Streamlining refers to a reduction in the amount of paperwork needed to accomplish the refinancing, and while some lenders advertise “no cost” FHA mortgage streamlining, be aware that this will incur a higher interest rate than if you had paid the closing costs up front.

The Servicemembers Civil Relief Act was passed in the 1940s to help military people cope with the requirements of being on active duty while trying to meet their financial obligations at the same time. Did you know that you can get an interest rate reduction to go to no more than six percent per year during your active duty service? This is true of both commercial FHA mortgages, but there is one catch. You must make a request to get this reduced rate. You may also be required to renew your request at periodic intervals as permitted by the Civil Relief Act. Make sure you completely understand the requirements of your lender and the rules of the Relief Act to take full advantage of this important FHA loan benefit.

In some very important circumstances, your FHA mortgage will not be foreclosed upon for ninety days after the payment date. These circumstances include a reduction or loss of income from natural disasters such as Hurricane Katrina, wildfires, and other events if your home is in an area declared by the President as a natural disaster area. There are guidelines for this 90-day delay, and those who are current on their FHA mortgage payments should continue to pay if possible. If your income was reduced because of an injury related to the natural disaster, contact your FHA loan officer right away to discuss the details of your case. You may have more assistance and leniency than you realize as many people are unaware of the full extent of their options in the wake of such natural or manmade disasters recognized by the President.

In other cases, falling behind on an FHA mortgage requires quick action. Regardless of your circumstances, do NOT ignore correspondence from your lender! It is very important to act immediately to avoid foreclosure. A housing counseling agency can be of great help. Contact (800) 569-4287 or TDD (800) 877-8339 to locate the housing counseling agency nearest you.

Some FHA mortgage situations may qualify for help from the FHA in the form of a one-time payment from the FHA insurance fund. This will help bring your FHA mortgage up to date, but there are requirements. If your loan is at least 4 months, but not more than one-year delinquent and you can start making full payments once again, you may qualify for this special assistance. Be aware that you will have to sign a Promissory Note, and you will have a Lien on your home until the Promissory Note is fully paid off. Remember that this is a one-time only offer, and to protect your credit rating for future FHA loans, FHA mortgages or refinancing packages you’ll need to maintain good credit.

The FHA Connection is an online system that allows authorized lenders and FHA business partners to access FHA computer systems to originate loans. The FHA Connection requires an FHA Connection user ID and password, and the ID can take between seven and ten days to reach an applicant. A company must designate no more than two people to act as the company's Application Coordinators. These coordinators maintain FHA Connection user ID numbers for the entire company and carry out the FHA Connection work they are authorized to do. If you aren't sure about how you can use the FHA Connection, check the website to learn more about FHA Connection. Using FHA Connection lenders can begin a new case using Computerized Home Underwriting Management System, update existing cases in the system and do insurance applications. These are just a few of the many functions available.

Those who are just learning about FHA Connection may be distressed to learn that there is no user manual currently available, but there is help available. However, the FAQ located here can answer a wide range of questions including topics such as Single Family Servicing (Title II), Property Improvement/Manufactured Housing (Title I), Lender Assessment and Lender Approval. Other topics include how to process and track an FHA case using FHA Connection, and helpline numbers listed by state. FHA Connection is a very important tool in the FHA loan process and there is no charge to use the service, only the username and password requirements.

When shopping for an FHA home, you will need to consider carefully whether you would like a fixed rate loan or an adjustable rate FHA mortgage. If you choose the adjustable rate loan for your FHA home, you’ll need to do some homework about the index. The index is the measurement of how the interest rate changes. Your lender will use this index to determine interest rate flexibility. The real issue with the adjustable rate mortgage on your FHA home is that it’s impossible to predict when or how much the interest rate may change. Ask your lender to explain the index in detail and how it works. Also, be sure to ask how much the index for your potential adjustable rate FHA home mortgage has changed recently, and where the information is reported. The flexible rate may require you to be more informed since the interest is subject to change.

The FHA does set limits on the amount you can get on an FHA mortgage loan. These limits are individually set in each county and state within the United States. You can view an itemized list of the limits at HUD. FHA mortgage loan limits are based upon the Fannie Mae/Freddie Mac limits on regular mortgage loans. They are set according to the type of home-single family, plus two, three and four family dwellings. FHA mortgage loan limits may vary between counties. Check with your lender to get a detailed list of the differences in your area. If you find that mortgage loan limits in a nearby county are more competitive, you may wish to consider buying a home in the area with the higher limit. For many people this won't be a consideration, but if you live on the edge of one county the difference in the limits may offer an advantage.

The FHA loan limit varies depending on the cost of the area. In high-cost areas, the FHA loan limit can be as high as a little over two hundred and ninety thousand dollars. In low-cost areas, that limit can be around a little over one hundred and sixty thousand dollars. FHA loan limits can change based on factors including average area home prices. Check with your lender to confirm the current FHA loan limit amounts. Remember that loan limits increase with the number of units. A multi-unit home will qualify for a higher rate, but those FHA loan limits are subject to the same factors as single unit homes.

An FHA loan can apply to many different circumstances. Did you know you could qualify for FHA home mortgages for a ‘fixer-upper” home? FHA loan guidelines cover this type of buying and several others. The fixer-upper type loan combines the purchase price of the house and the cost of repairs in one agreement. There are also FHA loans available for qualified borrowers over the age of sixty-two, to convert a portion of the equity in a home into cash. The FHA even has financing available for mobile homes and manufactured homes. All of this information can be explained by your local FHA lender, and you can also get help from a HUD-approved counselor by calling (800) 569-4287. Be sure to ask or do research about pertinent state or local programs in your area that can assist you with any required down payment on your FHA loan.

In addition to the other types of FHA loan guidelines that pertain to specific types of purchases such as a fixer-upper home or a mobile home, there is also a special kind of FHA guideline pertaining to loans for energy efficient homes. This kind of FHA loan is called the Energy Efficient Mortgage, also known as EEM. It provides mortgage insurance for the borrower to buy or refinance a residence and include the cost of energy-saving upgrades in the amount. The best part of the FHA’s Energy Efficient Mortgage is that the borrower isn’t required to qualify for the extra money needed to include the energy upgrades, and there is no down payment required for the extra amount. The rationale behind this kind of FHA loan is that by saving money on utilities, the borrower can afford to make higher payments, or get a larger loan based on those savings. Anyone concerned about the environment, saving money or just getting the most efficient home they can afford should seriously consider the EEM.

The FHA’s EEM is a very attractive proposition; it allows you to borrow additional money to incorporate energy saving features into your home and no additional “cost” to you in terms of having to qualify or make a down payment on the additional funds. Plus you get all of the energy saving technology and/or materials you desire to include into your living space. To qualify for the EEM, you’ll need to meet some FHA loan guidelines. These include being eligible for the maximum FHA-insured financing available, and the improvements must be cost effective. “Cost effective” according to FHA loan guidelines means that the cost of the improvements must be less than the total value of the energy savings over the life of the equipment or materials installed to save energy. That total value is calculated according to FHA loan guidelines at current levels. This kind of loan may take some extra homework on your part, but the savings would be well worth the effort. Contact your FHA approved lender to get help with resources in determining the cost of the materials and equipment versus the savings. Chances are your FHA lender has encountered your questions before and can give you a good head start on gathering the required information.

The good news is, according to current FHA loan guidelines, you can get FHA-insured financing for either mobile homes or factory built houses. The loans for mobile homes located in mobile home parks are separate from the FHA loans for people who own the land where the mobile home would be located. Many people don’t realize that FHA loan guidelines do permit a retailer to make modifications to a manufactured or mobile home, but such alterations must comply with HUD code. According to FHA loan guidelines, the definition of “alteration” is the replacement, modification, addition or removal of any equipment or installation before the sale to the homebuyer. Your FHA loan officer has more information on FHA loan guidelines for buying mobile homes, but be sure to read “The Manufactured Home Consumer Guide” for up-to-date information on issues, which pertain to your FHA loan.

Good news! The FHA does allow refinancing on an FHA loan. There are some FHA loan requirements, as always. These include FHA guidelines on the reasons for the refinancing, which must result in lower interest payments and principal on the FHA loan. Additionally, you are not allowed to take out cash on mortgages using the FHA’s “streamline refinancing” process. Remember that any amount to be refinanced must already be insured by the FHA in order to qualify. As part of the streamline process, lenders are permitted to include the closing costs into the new mortgage, as long as there is enough equity in the property. An appraisal may be required in order to properly determine the amount of equity on your home. Your FHA lender can tell you more about the refinancing process and what you will need to move forward with refinancing.

Refinancing your FHA home is a big decision, but one that can yield profitable results if handled correctly. Many people use refinancing, and an FHA refinance can give you the same benefits as other loans. You can use the FHA refinance to lower your monthly payment, and pay less interest. Some people use the FHA refinance to convert a thirty-year FHA mortgage to a fifteen-year mortgage! This can build equity in your home faster than taking the thirty-year route. Remember that an FHA streamline refinance—where the paperwork is reduced in order to speed the process—requires that you take out no cash on the mortgage, and the amount should be current and not delinquent. If you qualify for an FHA streamline refinancing package, you could be well on your way to higher equity and lower payments.

According to FHA loan guidelines, some borrowers are eligible for what is known as a “reverse mortgage”. This allows the borrower to convert a part of the equity in the home into cash. The FHA reverse mortgage has some unique differences from a ‘traditional’ home equity loan that can be a huge benefit to anyone who qualifies for the FHA reverse mortgage. One of the best; no payment is necessary until the borrower does not use their home as the “principal residence” or primary dwelling. If the home is converted from the primary dwelling, for example, into a rental property or if the borrowers move into an assisted living community. This feature of the FHA reverse mortgage is quite helpful for those who qualify.

The FHA reverse mortgage plan is aimed at people sixty-two years old or older. FHA loan guidelines require the borrower to have already paid off the home or owe very little on the home. One of the rules for this type of loan is that the amount owed must be paid off with part of the proceeds from the reverse mortgage. The borrower must also dwell in the home as the primary living space. Applicants are also required to get FHA approved counseling prior to being approved for the loan. The FHA reverse mortgage may have a few additional steps to take before getting the process completed, but the end result is well worth that extra effort.

FHA guidelines do not require you to have purchased your existing home in order to qualify for the FHA reverse mortgage. Provided you meet all the requirements (age 62 or older, occupying the home as the primary residence, etc) to qualify for a reverse mortgage, you can get approved so long as your property meets HUD requirements. Your new mortgage will be an FHA insured loan, regardless of the status of the prior loan. The approved dwellings for an FHA reverse mortgage include Townhouses, detached homes, units in condominiums and some manufactured homes. Check with your FHA lender to learn more about FHA guidelines on building types or to see if your dwelling qualifies.

It’s very important to do some FHA loan guideline research before entering into a new application for an FHA loan. Congressional amendments, changes in the structure of HUD or the FHA and other factors may add benefits or new requirements to your FHA loan. An excellent example of this is with the move to FHA’s streamline refinancing packages, which in many cases require less paperwork in order to be filed and processed. If it’s been more than a year since you last looked into an FHA loan, FHA mortgage or FHA reverse mortgage, check to see what new developments have occurred since last time. Your FHA approved lender can be of help, and you can search online for additional information.

The best example of the FHA’s constant evolution to help serve potential homebuyers is also one of the most recent. HUD proposes to amend the National Housing Act to allow the FHA to offer FHA insured mortgage options to borrowers who have low incomes and are often stuck with high-risk mortgages in order to purchase a home. If the FHA has its way, it will be able to offer these borrowers a better deal than the ‘non-prime’ lenders, and more incentive to purchase a home. The FHA loan guidelines may soon change to include options for lower-income borrowers. If you feel out of touch with your FHA options since the last time you checked, do some additional research to see what has changed with HUD and the FHA. You’ll be glad you did.

The Fair Housing act, FHA regulations, and FHA loan guidelines all forbid discrimination in lending. Discrimination can include denying a loan or home sale based on racial criteria, denying a disabled person the option of a first-floor dwelling, rental or condominium if otherwise available and many other circumstances. If you feel you have been discriminated against in any way, the FHA wants to know about it. Fair lending, selling and other services related to the purchase of a home are required by law. You can report discrimination by calling toll-free: 1-800-669-9777.

The FHA offers homeowners a chance to avoid foreclosure and make good on their FHA mortgages when in delinquent status. A Pre-Foreclosure sale is where the owner of the home sells the property for an amount less than the amount needed to pay off the loan. You may qualify by meeting specific FHA requirements, including 2 months or more delinquency on the FHA mortgage, and an appraisal shows that your home meets HUD guidelines. This kind of sale is not automatically available to everyone. You will need to contact a housing counseling agency and/or your lender to see if your particular situation is approved for such a transaction.

All housing appraisals required by FHA guidelines must be performed by appraisers on the FHA roster. This rules out having someone you know do the appraisal unless they meet FHA guidelines and are currently listed by the FHA. The appraisal is a very important part of meeting FHA requirements and it’s best to schedule it as early as possible. If there is a lot of FHA activity in your area you could find yourself in for a delay when trying to get your paperwork completed.

The FHA must assess the condition of a sale property to determine its market value, but there is another reason for the examination. FHA guidelines require an evaluation of any visible defects or deficiencies that could not only affect the value of the home, but also the safety of the occupants. FHA loans are not intended for homes that do not meet standards. Your health and safety should not be jeopardized by the purchase of a new home; the FHA has rules in place to prevent substandard housing from being passed on to FHA mortgage seekers.

When selling your FHA home, beware of rip-off artists and scammers. They do approach some people offering to “help”. Sometimes this comes in the form of an offer pay off the mortgage or give you money after the house is sold. What usually happens is your FHA mortgage goes unpaid, the home gets foreclosed upon (after the scammer collects rent for a while on your property—part of the scam includes a request that you move out quickly) and your credit rating is blemished. The important thing to remember in this situation is to seek professional advice before going into any such relationship with a third party. Unless you pay your mortgage, you may find yourself liable for the results of a deal with a third party. The FHA offers plenty of help and advice, including legitimate ways to deal with your circumstances should you fall behind on your payments or encounter financial difficulties. Always turn to the FHA first before trying to make a deal with a third party.

For those in more serious situations in danger of a foreclosure, there is a way to give the property back to the bank. The FHA home will revert to the bank and you won’t be able to save it—but the process is less damaging on a credit report than actual foreclosure. FHA guidelines require you not be in default on another FHA mortgage, and you must already be in default and not qualified for other options. According to FHA home loan rules, this truly is a last resort, but a select few will need to exercise that last resort in some cases. The FHA’s best advice is to do whatever you can to save your home before allowing it to go back to the bank or be foreclosed upon.

It is most important to stay current on FHA home loan payments, but should you encounter trouble there are many options available. One of those options includes a special forbearance—a special arrangement based on your financial circumstances. This is not the same as a one-time payment from the FHA or a partial claim. The special forbearance can provide for a temporary suspension or reduced payment. If you are in a situation where your living expenses have increased, you may qualify for this FHA assistance. You must contact your FHA approved lender to get started. You’ll be asked to show proof of the increased living expenses including medical bills, bank statements and other paperwork to justify your claim. The FHA mortgage process is not a “one-mistake” situation; your lender will work with you provided you can demonstrate a legitimate need and a desire to be financially responsible.

It’s true, when you go off in search of an FHA approved lender, you may encounter some unsavory practices along the way. Perhaps you started looking at a non-FHA home loan provider without meaning to, or you found what sounds like a better deal. Even if you are getting a legitimate offer, be sure to follow some good FHA home loan/HUD advice. For starters, never sign any document you don’t understand. Ask for a complete explanation of all terms and conditions. If you get the runaround when asking for clarification, do not sign the documents. If you are unsure about the reputation of a particular lender or seller, it’s a good idea to consult some real estate agents in your area to check the references of the agency or seller in question. You may learn a great deal based on the prior experiences of the agents you speak with! Anyone who tries to persuade you to make false statements on your loan paperwork is not only violating FHA home loan guidelines, they are breaking the law. Never deal with anyone who encourages you to be dishonest on your paperwork. FHA guidelines were created for a reason. Any lender who has a problem following them to the letter isn’t worthy of your business.

Many of those seeking FHA mortgage loans are pleased to learn that the FHA is quite interested in teaching borrowers about their rights. Did you know you have the right to know the reasons for being declined on a loan? FHA guidelines are written to help both the lender AND the borrower through the process. You have the right to know specific details about your loan and have all terminology you don’t understand completely explained to you. Your FHA home should be funded with a complete understanding of what you are required to pay and when. Never deal with a lender who is unwilling to explain the full contents of the loan and the meanings of terms and clauses you may have difficulty grasping.

Some people feel a bit guilty for trying to shop around for a loan. According to the FHA, you are not only helping yourself by shopping around, it is absolutely your right to do so. Never allow a lender to pressure you into taking a loan without exploring your options. An FHA home mortgage loan is a big step-you’ll want to sign the right contract for the right amount of money. FHA mortgage guidelines state quite clearly that you also have the right to know what monies are refundable to you should you decide to cancel the contract. Ask up front and know what your costs should be. You’ll be glad you did.

FHA guidelines are set up to help you get the amount you are qualified for and set up conditions to allow you to successfully buy an FHA home. What the FHA mortgage rules cannot do is determine whether or not you can meet your monthly obligations. It’s up to you to make the call; if you begin the process of buying a home only to realize you can’t really afford the size of the payments, immediately discuss the situation with a housing counselor and your lender. The FHA has many programs set up to assist you with getting into a good home at a fair price, but if you have doubts about your ability to pay, waiting and getting some housing counseling may be a safer bet. A delinquent loan affects your credit rating; waiting until you are sure to purchase a home does not hurt at all.

There are many scams that dishonest sellers and lenders use. FHA guidelines are very clear about above-board practices lenders should be using to help you get into an FHA mortgage. Your bank may be an FHA approved lender, but people do encounter individuals who don’t adhere to FHA rules. If you encounter a questionable person in the pursuit of your FHA home, be sure to report the suspicious activity and consult a housing counselor for advice. The FHA and HUD routinely warn people to stay away from anyone who claims they are your only chance to get into a home. You should also beware of anyone offering you paperwork to sign with blank pages or spaces. If the closing terms are not what you agreed to, you should not sign. The same goes for someone who tells you that a good deal is only available at a particular lender. Beware of any situation where high-pressure tactics are used. Never sign under those circumstances. Instead, contact the FHA and a loan counselor immediately.

HUD offers many grant programs that could apply to your circumstances. FHA loans are only one part of the story! It’s a very good idea to work closely with your FHA approved lender or a housing counselor to determine if you are eligible for grant monies along with your FHA mortgage, FHA streamline refinancing or other programs. In many cases, those who qualify will want to register early for certain grant programs. Electronic submission is mandatory in many categories, so it’s best to plan to file via the internet. Available grants include funding for people with disabilities to find mainstream housing, Self-Help Ownership programs and many more. Some may not be compatible with the types of loans you seek, but a word with your FHA lender will clear up any confusion over which programs work best with FHA guaranteed loans.