September 25, 2015
We get many questions from readers about FHA loans in our comments section. Some of those questions refer to specific credit issues such as the one that came in recently asking:
“My loan is currently processing. There is a problem with being 30 days late on my rent last year. Will this totally effect my changes of being approved???”
The answer to this question isn’t as simple as quoting a passage from the new FHA loan rulebook, HUD 4000.1. The answer depends greatly on the borrower’s other financial qualifications. FHA loan rules state that a one-time lapse is not necessarily enough to dismiss the applicant as a bad credit risk.
The lender will be looking for patterns that indicate whether the borrower has a reliable payment history on financial obligations. FICO scores and other qualifications will be examined to see what kind of overall pattern has been established by the borrower.
That said, most agree that it is highly recommended to come to the FHA loan process with no fewer than 12 months of on-time payments for all financial obligations. Anything less can hurt a borrower’s chances for loan approval, but compensating factors may be taken into account.
A borrower who doesn’t necessarily meet the ideal standards for a home loan may be able to offset his or her shortcomings with a larger down payment, substantial cash reserves or other factors the lender can take into account.
As you can see, the answer to this type of frequently asked question depends greatly on circumstances–it’s best to discuss your situation with a loan officer to see what may be possible in your situation.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It is quick and easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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