If you are now focusing on originating FHA loans, you need to know who your FHA borrowers are and what rules apply. To be eligible as a borrower on a FHA loans, each person must be either a US Citizen, Permanent Resident Alien, or Non-Permanent Resident Alien.

Permanent Resident Aliens will be required to provide acceptable evidence of permanent residency issued by the U.S. Citizenship and Immigration Services.

Non-Permanent Resident Aliens will be required to provide a valid Visa or other proof of legal residency along with a valid social security number.

FHA Loans are for Borrower’s Primary Residence

Generally, FHA loans are meant to insure only your borrower’s primary residence on single family residences, condominiums and any 1-4 unit property and cannot be used for other purposes. On purchase loans, the borrower must occupy the property within sixty (60) days after the loan close with continued occupancy for at least one year. Some lenders will allow exceptions to this rule due to hardship or extenuating circumstances.

In certain cases, your borrower can apply for a FHA loan on one property even when the borrower has another residence secured by an FHA loan. This is permitted in the following situations:

Relocation

If your borrower is moving and establishing a new residence that is not within a reasonable commuting distance (the new residence should be at least 50 miles away from the current residence), then the borrower can receive an FHA loan on the new property without being required to sell the existing FHA insured property.

Increase in Family Size

If the borrower’s family grows to the point that the current FHA secured home is now too small to house all of the borrower’s dependents, then the borrower may obtain another FHA secured residence.

Vacating a Jointly Owned Property

If your borrower is moving out of a currently FHA insured residence which will remain occupied by an existing co-borrower, your borrower can still apply for a new FHA loan. For example, if parties are now divorced, then the vacating spouse can buy another home with a FHA loan.

These are just some of the FHA lending basics with which you need to be familiar. To learn more, download this: FHA Lending Basics