Articles Tagged With: Credit Requirements

June 7, 2013

FHA Loan Questions: Applying for an FHA Loan With No Credit Card History

A reader asks, “I have a credit score of 662, but I have no outstanding credit. I do not have any credit cards open, nor a car loan (loan was open in 2003)I have 0 installment loans, 0 credit cards, 0 retail cards. How can I get approved for a home loan? I have had credit in the past, but closed my accounts when I moved out of the country in 2001 and never got any credit cards again.” FHA loan rules address this in HUD 4155.1 Chapter Four, Section C. That section says in part, “Past credit performance is the most useful guide to • determining a borrower’s attitude toward credit obligations, and • predicting a borrower’s future actions. Borrowers who have made payments on previous and current obligations | more...

June 4, 2013

FHA Loan Reader Questions: Does Bankruptcy Hurt Your Chances?

By Joe Wallace

A reader asks, “We want to know, if filing bankruptcy 3 years ago will hurt our chances? We had to do that because I lost my job. But now I am on social security disability so I do have income.” “Our credit score is about 650. My husband makes 60K per year and I get 12K per year but little in savings. We have established new revolving credit within the past two years. Is this good enough to apply and get pre-approved for a home loan?” We’ve been getting a number of bankruptcy-related questions lately, and one thing we’d like to remind potential FHA borrowers in this situation is that a call to 1-800 CALL FHA (the official help line of the FHA) can answer many of these bankruptcy questions | more...

June 3, 2013

FHA Loan Reader Questions: Bankruptcy Issues

By Joe Wallace

A reader asks, “I recently completed a debt reorganization on ch 11 bankruptcy. My plan is 5 years. I will not be discharged until then (5 years).” “However, I would like to refinance my mortgage loan. my credit score is bad because I am in bankruptcy for the next 5 years. Can I refinance ? Can a FHA loan help me and would they refinance my existing loan?” FHA loan rules have plenty to say about bankruptcy issues. For example, in HUD 4155.1 Chapter Four, we find the following: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have • re-established good | more...

May 31, 2013

FHA Loan Application Rules

By Joe Wallace

When some FHA mortgage loan applicants fill out their loan paperwork, it may be tempting to leave recent or new financial obligations out of that paperwork. In some cases it may be a simple oversight, in others it might be a question of an applicant mistakenly thinking that the lender won’t know or can’t find out. What’s the reality? FHA loan rules anticipate situations like these. In HUD 4155.1, Chapter Four, Section C, there’s a heading titled, “Recent and/or Undisclosed Debts or Inquiries”. It states: “Lenders must determine the purpose of any recent debts, as the borrower may have incurred the indebtedness to obtain the required cash investment.” That means that the lender must, among other things, determine whether the borrower has gone into debt in order to make his | more...

May 30, 2013

FHA Loan Credit Standards

By Joe Wallace

When applying for an FHA home loan, many borrowers are in the dark about credit score requirements and other issues related to FICO scores in general. We recently answered a reader question about FHA loan credit requirements and now is a good time to review FHA policy on FICO scores. The FHA requires the lender to use an available credit score to determine whether or not the borrower is eligible for an FHA home loan. The FHA has rules for interpreting or using FICO scores from credit reports. According to the FHA Frequently Asked Questions list on the official site: “When the credit report reflects: • 3 credit scores (one from each repository) – the middle score is used • 2 credit scores – the lower of the two scores | more...

May 30, 2013

FHA Loan Reader Questions: Credit Scores

By Joe Wallace

A reader asks, “My credit score is in the ‘poor’ range (low score 475. Hi score 585) and I will need assistance with down payment. However, I have an excellent income and have been on the job over 15 yrs. I have recently been approved for an auto loan which I am using to I prove my credit scores. Might I qualify for FHA, and what assistance is available for the down?” The FHA has rules about minimum credit scores needed for FHA loan approval. According to the FHA official site: “When a credit score is available, it must be used to determine eligibility for FHA insured financing. The score that is used to determine eligibility is called the ‘decision credit score’. When the credit report reflects: • 3 credit | more...

May 28, 2013

HUD Settles Alabama Housing Discrimination Case

By Joe Wallace

A press release issued by the FHA and HUD announces the settlement of a housing discrimination case in Alabama. According to HUDNo.13-077, “The U.S. Department of Housing and Urban Development (HUD) announced today that LLB&B, Inc., a real estate company based in Mobile, AL, will pay $29,000 as part of a Conciliation Agreement resolving allegations that one of its agents refused to show a condominium to a prospective homebuyer because he is African American. ” This violation of the Fair Housing Act came to light thanks only to a misdirected phone call. According to the press release, “The homebuyer alleged that he learned of the discrimination when the real estate agent inadvertently left a message on his telephone voicemail indicating her belief that white neighbors would ‘panic’ at the prospect of | more...

May 23, 2013

FHA Announces Assistance For Homeowners in Oklahoma

By Joe Wallace

The FHA and HUD have announced disaster relief for victims of the recent tornado in Oklahoma. According to HUDNo.13-078, “HUD will speed federal disaster assistance to the State of Oklahoma in addition to resources being provided by Federal Emergency Management Agency (FEMA) and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to tornadoes and severe storms.” U.S. Housing and Urban Development Secretary Shaun Donovan has also reiterated current Federal Housing Administration policy, “that mortgage lenders should release insurance payments to homeowners rather than applying these funds toward outstanding mortgage debt” according to the press release. On Tuesday May 21, 2013, the President made a federal disaster declaration for Oklahoma counties including Cleveland, Lincoln, McClain, Oklahoma and Pottawatomi. A federal declaration allows | more...

May 21, 2013

FHA Loan Reader Questions: Foreclosure and the Three-Year Waiting Period

By Joe Wallace

A reader asks, “I had a home that Foreclosed in 2009. The Sheriff Sale was completed in December 2009, however according to the FHA office the claim on my home was not closed out until a little over a year later on January 14, 2011.” “Which means that instead of being in a position for another FHA Loan in 2012 we have to wait until January 2014, which is considered to be over 4 years since the Sheriff Sale. Why would it take so long between the Sale and the actual closing of the claim on the house? Is there anything I can do other than wait until 2014?” While we can’t address why it takes so long between a foreclosure and the sheriff sale, we can address the portion | more...

May 20, 2013

Can Veterans Apply For FHA Home Loans?

By Joe Wallace

There are many reasons why a veteran might not want to apply for a VA home loan and choose an FHA mortgage instead. One such reason involves eligibility issues–a borrower who has purchased a home with a VA mortgage in the past may have complications that hold up getting eligibility restored. Others might have a personal preference depending on the circumstances–but regardless of the reasons why a veteran decides to investigate FHA loan options, they are definitely open to those who serve. What do FHA loan rules say about veterans who want to apply for an FHA mortgage? According to HUD 4155.1, “Military personnel are considered occupant-owners, and are eligible for maximum financing if a member of the immediate family will occupy the subject property as his/her principal residence, whether | more...