January 7, 2015
A reader asks, “I have just started building my credit I have never had credit before in the past but do now I checked my score and it’s a 680 I do have two credit cards and my payments have always been paid on time.”
“I don’t know much about credit but I’m very interested in buying a home I am self-employed I have a store in New Bedford for the past 9 years I also rent the apartment upstairs from my store just wondering would I be eligible for finance a foreclosed home with an FHA loan now I’ve had my credit for a year now…”
When applying for a home loan, a participating lender will likely be looking for a credit score of 620 or better and one year of on-time payments on all financial obligations. Borrowers who meet these two minimums have a much better chance of being approved for an FHA home loan.
The reader’s self-employment status means the lender will require additional paperwork in most cases, including tax records, profit/loss statements, and other documents that pertain to the borrower’s business, the stability of income, etc.
Self-employed borrowers who have been running their own businesses longer tend to have better chances with an FHA home mortgage loan because if the business can show on paper that it is sustainable and that the income is reliable, that satisfies the lender’s need to verify income which is dependable.
Borrowers who have questions about their FHA loan eligibility or who want advice on how to prepare for an FHA mortgage loan should call the FHA directly at their toll-free number: 1-800 CALL FHA. Call this number and request a referral to a local HUD/FHA approved housing counselor who can help with advice in areas like these.
Housing counselors can provide advice about getting prepared for the FHA loan application, how to help improve credit scores yourself (not by paying third parties to do so) and give tips about becoming a new homeowner in general. It’s definitely a good investment of your time to talk to a HUD/FHA approved housing counselor.
Do you have questions about FHA home loans? Ask us in the comments section. You can also follow us on Facebook.
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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