Articles Tagged With: Credit Requirements

November 26, 2014

Holiday Spending and FHA Loans: What To Consider

This week, shoppers brace themselves–and their credit cards–for Black Friday and the official start of the holiday shopping season. If you are in the planning stages for an FHA home loan or a refinance loan, there may be some considerations to make when it comes to your holiday spending. At least where your credit cards are concerned. The holiday shopping season is probably the time of year when it’s most tempting to apply for a new credit card account or even multiple accounts. But opening new lines of credit when you’re just about to apply for a new home loan or refinance loan is a bad idea. Your debt-to-income ratio can suffer when new lines of credit are opened, and a lender may need to consider both the used and | more...

May 13, 2014

FHA Loan Credit Report Rules

By Joe Wallace

Going into the FHA loan application process for the first time? It can be helpful to understand what your lender is looking for from your FHA loan application. Do you know the FHA’s rules for credit and how credit reports are handled by your loan officer? FHA loan rules state that all applicants for the loan must be checked–credit reports must be pulled, employment history and other financial qualifying information is required. HUD 4155.1 Chapter One has rules and instructions for the lender in these areas. Under “Required Credit Information” we find the following: “A credit report submitted with a loan application must contain all credit information available in the accessed repositories. Additionally, for each borrower responsible for the debt, the report must contain all of the information available in | more...

May 12, 2014

FHA Refinance Loans With No Cash Out

By Joe Wallace

There are several FHA refinance loan options. One is FHA Streamline Refinancing, which has no FHA-required credit check or appraisal (though your lender may require one of both). Another is the FHA Cash-Out refinance loan option, where a borrower can take cash back on the loan once the original loan is paid in full. The cash back on such loans can be used for any purpose acceptable under the terms of the new loan agreement. But there’s another refinance loan option available similar to cash-out in that a credit check is required, but without cash back. The no-cash-out FHA refinance loan has rules covered in HUD 4155.1, including maximum loan amounts and what can be added to the new loan amount. FHA loan rules also cover what kinds of liens | more...

February 12, 2014

FHA Loan Reader Questions: Down Payments and Bankruptcy

By Joe Wallace

We’ve gotten plenty of reader questions lately on the subjects of down payments, bankruptcy, and eligibility for FHA home loans. Here’s one: “Is there any company that will finance a small condo without a down payment. Thank you” And here’s another: “My wife and I surrendered our home thru a chapter 13. The chapter 13 was a 100% repayment plan that was successfully discharged in December of 2013…We have entered into a lease option home purchase and would like a straight answer on how long of a “waiting period” we must endure before we are able to finance a home again? We also have about $80K in sweat equity against an agreed upon purchase price of $270K. What type of down payment can we expect to need?” FHA loan rules | more...

January 31, 2014

FHA Loan Occupancy Rules: A Reader Question

By Joe Wallace

A reader asks, “With a FHA Arm 5/1 or Section 251 loan, how long do I have to live in the house before I can sell it?” This may seem like a tricky question. FHA loan rules for single family home loans found in HUD 4155.1 do list occupancy requirements. According to Chapter Four: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.” But that rule says nothing about the borrower’s ability to sell the property. Borrowers are | more...

January 30, 2014

FHA Loans, Credit Reports, And Identity Theft

By Joe Wallace

One of the most oft-repeated bits of advice related to FHA home loans or refinance loans is that it’s best to start early–at least a year in advance–when planning for an FHA loan application. One of the reasons to start early involves the length of time it can take to check your credit report to learn your credit score and to make sure there’s no erroneous data or evidence of identity fraud on your report. With recent headlines about credit card data being stolen from major retailers, this advice couldn’t be more helpful. The Consumer Financial Protection Bureau (CFPB) is urging customers of “big box” retailers recently in the news for data breaches and hacking problems to check their credit card activity and credit reports for signs of fraud or | more...

January 27, 2014

FHA Loan Answers: Can A Parent Buy A Home With A Child Using An FHA Loan?

By Joe Wallace

Lots of parents want to help their children get a leg up in the early stages of adult life. Some parents pay for their children to go to college, some buy cars, and still others buy homes for their children. Can a parent and child apply for an FHA mortgage together even if the parent doesn’t plan on living in the home? FHA loan rules found in HUD 4155.1 explain what is possible and what is not possible for an FHA loan when it comes to applications with “non-occupying co-borrowers”. In such cases, Chapter Two Section B of HUD 4155.1 says, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence. When there are two | more...

January 22, 2014

FHA Loan Reader Questions: Getting Behind on an FHA Mortgage

By Joe Wallace

A reader asks, “Let’s say a borrower misses a month’s payment. The next month, they have enough money for one payment, but not the two months that they owe. Can the lender tell them not to pay until they have enough money for *all* that they owe, preventing them from at least not getting further behind in their payments? This feels unethical; is it legal?” Skipping payments on an FHA loan is a bad idea in general. The reader did the right thing by contacting the lender as soon as there was a problem making the payments–borrowers should always work closely with a lender in order to avoid going into FHA loan default and foreclosure. But in situations where the borrower isn’t sure if the participating FHA lender is helping | more...

January 17, 2014

FHA Minimum FICO Credit Score: A Reader Question

By Joe Wallace

A reader asks, “I have Bankruptcy discharged June 1 2011. I do not have lots of credit. Have small inheritance from mother. I Want to purchase small house in Cleveland, Georgia. I have joined Equifax (663), TransUnion (718) and Experian (638). When I access each one has a score different than the other credit reporting agency. How can I determine my creditworthiness?” FHA loan rules say that in general, when a FICO score is available, the lender is required to use it to help determine a borrower’s creditworthiness. The credit score alone doesn’t tell the whole story–there are other factors that play a part in whether or not an FHA loan is approved–but it does play an important role The instructions for the lender on how to process credit score | more...

December 24, 2013

FHA Loan Program FICO Score Minimums: A Reader Question

By Joe Wallace

A reader asks, “I noticed that to be eligible for an FHA loan your score must be at least at a 580. Is this true? I was told this is just something you show here on your site but once you really go through the process its a whole different story. I’m looking to buy my 1st home and I want to be told what’s right as to what’s wrong.” FHA loan FICO score requirements, as listen in HUD 4155.1, are as follows: That is an exact duplicate of the table found in HUD 4155.1. The basic answer to the reader question is that according to FHA loan rules, any borrower with a credit score above 500 is technically eligible for some kind of FHA guaranteed home loan. However, these | more...