October 13, 2015
A reader asked us a question in the comments section recently about FHA loan applications and missed payments. “I have let family members rent 2 apartments in my name and they left them early which left me with the bill–will that keep me from qualifying for a FHA loan?”
The answer to this question depends on several things. Was this simply a case of breaking a lease? If so, was the rent paid on time before the lease was broken? If there are late or missing payments, that could be an issue depending on circumstances, the lender, and whether the payment issue was ever resolved.
Any debt in the borrower’s name would be examined by the lender, even if it was to help out another family member. Co-signing is also an issue in such cases unless the borrower can show the lender proof that he or she would not be liable should the borrower default on the financial obligation. The lender would be required to document such proof.
If there is an ongoing dispute about late or missed payments, that could affect a lender’s willingness to work with a borrower on an FHA mortgage loan. A borrower’s rent or mortgage payment history can be a very important factor in the decision making process for FHA loans.
And if the late or missed payments occurred 12 months or less before the FHA loan application was submitted, that can definitely be a problem. It is strongly recommended that borrowers come to the FHA loan process with no fewer than 12 solid months of on-time payments for all financial obligations. Anything less can jeopardize your loan application.
Borrowers who aren’t sure about their FICO scores or credit history and need advice should call the FHA directly at their toll free number (1-800 CALL FHA) and request a referral to a HUD-approved housing counselor in the local area who can give pre-purchase advice on how to get ready for an FHA mortgage loan.
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 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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