Issue: Q&A – September 25, 2018

VA – Rental Income Calculation on Exiting Property – How do I calculate rental income for a VA borrower on a departing owner-occupied residence where there is no history of rental income?

Answer: VA does not have an equity requirement for a departure residence when using rental income from that departure residence, to qualify for a new VA loan.  VA does not use the same methodology for rental income on a newly departed residence as they do for an investment property.  You do not use 75% of […]

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FHA – Timeline for Flipping Rule – What exact date does FHA use to determine the 90-day rule for property flipping?

Answer: Per the guideline below, you have to measure from the date the seller legally owned the property to the date the buyers executed the sales agreement.  You will need to discuss what constitutes ‘legal ownership’ in the subject property state with your company’s management or in-house attorney.  I can’t provide that information, as this […]

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FHA – Verifying Continuation of Survivor Benefits- If a borrower’s Social Security Survivor Benefits Letter does not state an expiration date, what date do we use?

Answer: FHA does not specifically address Social Security Survivor Benefits in their guidelines.  They do direct lenders to assume continuation of SS benefits in cases of SS Retirement and SS Disability Income when there is no expiration date on the award letter.  But again, this does not apply to Social Security Survivor Benefits. The original […]

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FHA – Using Rental Income-Limited History- How do you count rental income when the tenant has not been paying long enough to be reported on the borrower’s tax returns.

Answer: FHA has a specific requirement for determining rental income that can be used for qualifying when there is a limited history of rental income. See the highlighted text below and specifically the equity requirement. Reference: 4000.1, II, A, 4, c, xii, (I) (3) Rental Income from Other Real Estate Holdings (TOTAL) (a) Standard: Rental Income from other real estate holdings […]

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FHA – Number of FHA loans Allowed Per Borrower- Can a borrower have more than one FHA home loan if their former FHA home is now an investment property?

Answer: FHA allows a borrower to have 2 FHA mortgages and for a departure residence to be used as an investment property. However, they must meet the guidelines below. Reference:4000.1, II, A, 1, b, iii, (A), (2) (c) Exceptions to the FHA Policy Limiting the Number of Mortgages per Borrower: The table below describes the only […]

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