August 5, 2019
We get plenty of reader questions about FHA home loans. Many of those questions have to do with worries that a borrower won’t qualify for the loan. One of the biggest topics in this area?
“Can I get an FHA Home loan without perfect credit?”
We fielded a question like that recently-the term “perfect credit” was used. The reader seemed to assume that perfect credit is required in order to buy a home. But who do you know as a homeowner with perfect credit?
The truth is, FHA home loans do NOT require perfect credit for loan approval. But many potential home owners don’t understand how the credit check process works, or the requirements for loan approval. So it’s easy to understand how people can assume wrong things about the process.
There are two basic credit criteria that must be met in order for a lender to approve your mortgage loan whether it’s an FHA loan, a VA mortgage, USDA loan, or conventional home loan.
The first one is the FHA minimum credit requirements. Those requirements include a consistent record of on-time payments, FICO scores within a certain range (580 or higher for the lowest down payment), and other factors listed in the FHA Single-Family Home Loan Handbook.
The second is the lender’s own standards, which are impossible to state definitively since these standards will vary among the various financial institutions.
What these things have in common is that the borrower is expected to show patterns of responsible credit use, bring no late or missed payments on the credit record for at least 12 months leading up to the loan application, and be able to afford the loan with the right ratio of income versus monthly financial obligations.
No, we aren’t discussing specifics here-there are several variables that must be addressed including employment history and other factors. But the bottom line is that a potential borrower should never count themselves out of the running, so to speak, when it comes to home loan approval.
Let the lender determine your creditworthiness and discuss your needs and goals for owning the home with an FHA loan officer. Did you know you can fill out an online form to be put in touch with a participating FHA lender who will discuss your needs with you?
The link takes you to a website owned by a private company and not a government agency, and it’s a good way to get started on the journey toward owning a home.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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