September 21, 2018
FHA refinance loans have a set of guidelines for credit scores and credit history-do you know what it takes to be approved for an FHA refinance loan? There are some common questions about FHA refinance loans where credit is concerned, knowing the answers may help you a great deal.
What Kind Of Credit Scores Do I Need To Be Approved For An FHA Refinance Loan?
In general, FHA loan requirements include a FICO score at 500 or better for some loans, 580 and higher for maximum financing. These are FHA minimum requirements and do not reflect lender standards, which may be higher.
Refinance loans with cash out will require certain FICO score ranges (lender provided) that are key to getting maximum financing. You will need to ask the lender about FICO scores and the requirement for the type of refinance loan you seek.
Are The FICO Score Requirements The Same For All FHA Refinance Loans?
No. For FHA Streamline Refinance loans there is no FHA-required credit check in many cases, though the lender may require one anyway. FICO score rules for certain loans like the FHA Rehab Refinance Loan for disaster victims (the FHA 203(h) refinance loan) only require a minimum FICO score of 500.
Other FHA mortgages may require higher scores. FICO score issues for refinance loan approval are not necessarily the same when it comes to loss-mitigation and foreclosure avoidance measures-talk to your loan officer if you need to investigate foreclosure avoidance as the standards in this area may be quite different.
Can I Apply For An FHA Refinance Loan And Skip A Payment Or If I Have Missed Payments In My Credit History?
Any late or missed payments in the 12 months leading up to any major credit application is bound to be hurtful to your chances at loan approval. This is true for borrowers who are looking for an FHA refinance loan that is not associated with foreclosure avoidance; in any case your FHA home loan must be current or brought current as a condition of loan approval.
Skipped payments-even on a refinance loan for an FHA mortgage-are not permitted. FHA loan rules in HUD 4000.1 state, “If a Borrower is currently delinquent on an FHA-insured Mortgage, they are ineligible for a new FHA-insured Mortgage unless the delinquency is resolved.”
That resolution does not always mean having to come up with all the missed payments before getting loan approval-the missed payment issue may be addressed in the funding of the new loan.
You should discuss your specific circumstances with an FHA lender to see what is possible at that financial institution for refinancing if you need to catch up on payments, need cash out, or want to get into a lower interest rate or monthly payment.
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.
Browse by Date: