HomeLander Mortgage

Tag: fha loans

  • FHA Home Loans – New Construction Guidelines for 2022

    FHA Home Loans – New Construction Guidelines for 2022

    There are various loan types and programs available for homebuyers. One such is the FHA Loan Program. The Federal Housing Administration insures FHA-Insured Loans. If a borrower defaults on a loan and the house isn’t worth enough for the debt to be repaid through foreclosure, the FHA will compensate the lender for a percentage of the loss. 

    The FHA Construction loan, however, allows borrowers to take out a single loan allowing them to buy land, build their home from scratch, as well as finance their permanent mortgage. This is known as a three-in-one mortgage called the ‘FHA One Time Close Construction loan’. These loans are also government-backed by the Federal Housing Administration; however, the requirements for this program can be stricter than for traditional FHA loans.

    As of 2022, these are the updated FHA one-time-close construction loan requirements which apply to the borrower, property, and contractor.

    Borrowers must be able to provide a down payment of at least 3.5%. 

    They must have a credit score of 620 or higher. 

    Debt-to-income ratio (DTI) must be acceptable for FHA loan guidelines and can be as high as 56%.   

    Additionally, all FHA borrowers are required to pay mortgage insurance premiums (MIP) – this protects the lender in case of default.

    As for the chosen property, the loan amount must not exceed FHA loan limits and cannot exceed the property county’s maximum loan limit. 

    The property must also be eligible.  Eligible homes include single-family homes, modular, and manufactured homes. Only single unit homes are permissible with the FHA construction loan program, and the home’s intended use must be a primary residence.  

    Lastly, the FHA must approve the chosen contractors. Contractors are all required to have the necessary licensure required by their state, general liability insurance, and at least two years of experience in constructing homes.

    Meanwhile, keep in mind that loan interest rates for an FHA construction-to-permanent loan can be higher than for other types of FHA loans. HomeLander Mortgage offers the one-time-close construction loan.

    Builders may request draws as the work is done.  As work is completed, the contractor is paid on a draw schedule set before closing.

    Once the home is completed, the lender will convert the construction loan to the permanent mortgage at the interest rate that was locked at the time the loan closed, before construction started.

    For more information on how the process works, please visit HomeLanderMortgage.com. HomeLander Mortgage specializes in these types of loans and is able to navigate the process. Schedule a call to begin the process at www.homelandermortgage.com

  • What You Need To Know Before Renovating

    What You Need To Know Before Renovating

    Home renovation loans, also known as Home Improvement loans, are a way for homeowners to finance their fixer-uppers or older homes that need updating. These loans cover the entire renovation project – and yet many potential borrowers don’t know that they are an option – let alone how they work.

    Whether it’s a kitchen or bathroom renovation project, adding on a home office, or installing a new roof, major home improvements require a sound budget. Home renovation loans provide funding for renovating, remodeling, and repairing a home. It can be thought of as a mortgage that includes extra money for home improvements.

    Borrowers who may benefit from a home renovation loan are contemplating home improvement ideas.

    • Are you looking to modernize a kitchen or bathroom(s)?
    • Are you looking to remodel a home to fit your lifestyle and family needs?
    • Are you wanting to add one or more rooms to the house?
    • Are you contemplating the purchase of a home with a low asking price but in need of serious work?

    Additionally, these types of loans give more homeowners and/or borrowers more control over building equity. By making improvements and substantial upgrades, these projects will improve the value of the property in the long run.

    Some types of home renovation loans available include conventional renovation loans, FHA renovation loans, USDA renovation loans, and VA renovation loans.

    Conventional Renovation Loans at a glance:

    • Low fixed rates that are locked prior to closing and guaranteed.
    • PITI (principal, interest, taxes, and insurance) payments are due during the renovation period.
    • Closing costs can be rolled into the loan.  Ask us how. 
    • 97% financing available
    • 620 minimum FICO score required

    FHA Renovation Loans at a glance:

    • Low fixed rates that are locked prior to closing and guaranteed.
    • PITI (principal, interest, taxes, and insurance) payments are due during the renovation period.
    • Closing costs can be rolled into the loan. Ask us how.
    • Up to 96.5% financing available
    • 620 minimum FICO score required

    VA Renovation Loans at a glance: 

    • Low fixed rates that are locked prior to closing and guaranteed.
    • PITI payments are due during the renovation period.
    • Closing costs can be rolled into the loan. Ask us how.
    • 100% financing available (90% on refinance transactions)
    • 620 minimum FICO required
    • Repairs must be non-structural

    USDA Renovation Loans at a glance:

    • Low fixed rates that are locked prior to closing and guaranteed.
    • PITI payments are due during the renovation period.
    • Closing costs can be rolled into the loan. 
    • 100% financing available
    • 620 minimum FICO score required

    While they are similar in that banks and other approved lenders issue them, they differ greatly in type and who qualifies.

    The Federal Housing Administration insures FHA-Insured Loans. Though the FHA does not have income requirements, borrowers need to prove their income, and there are limits on loan amounts. 

    VA Loans are available to veterans who have served or are currently serving in the armed forces, reservist/national guard members, or an eligible surviving spouse. The Department of Veteran Affairs guarantees these types of loans. Borrowers must also have a Certificate of Eligibility (COE). The COE proves that the applicant officially meets the minimum military service requirements. This type of loan is only available through certain VA-approved lenders. 

    The U.S. Department of Agriculture (USDA) loans are for homes in rural areas, though many other suburban communities and locations are also able to qualify. The loan is subsidized through the USDA. Borrowers must demonstrate stable income and the ability to make payments without incident for at least 12 months based on assets, savings, and income. 

    HomeLander Mortgage will be there every step of the way to help borrowers determine which type of renovation loan is appropriate to their budget, needs, and qualifications. Schedule a call to begin the process at www.homelandermortgage.com