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Articles Tagged With: FICO Score Requirements

New FHA Home Loan

November 8, 2023

Credit Scores For Home Loan Approval

By Joe Wallace

What credit score do you need to be approved to buy a home? The answer to that question can change depending on the type of home loan you seek and the options you want.  For example, FICO score requirements to be approved for a manufactured home loan may be lower than those who want to build a home from the ground up using a One-Time Close construction loan due to elevated risk to the lender. Construction loans are higher-risk transactions for a participating lender than manufactured homes. That means the FICO score requirements from your lender are likely to be different than a government-backed home loan program’s minimums. What FICO scores do you need to be approved to buy a home? FHA FICO Score Requirements FHA loan guidelines say FICO | more...

 
FHA loans

May 19, 2023

FHA Loans and Your Credit

By Bruce Reichstein

Lots of people want to know what credit issues will affect the approval of FHA loans. The shortest answer is that it’s a combination of FICO scores, your repayment habits on all financial obligations (not just credit cards or revolving debt), and the amount of debt you pay on each month versus how much income you have. But there are some hard numbers to look at, too. FHA minimum requirements for credit include FICO score requirements for maximum financing. If your FICO scores are 580 or above, you technically qualify for maximum financing, which means only a 3.5% down payment. But FHA FICO minimums are not the only FICO score requirements you’ll need to meet. Credit requirements at your chosen lender can be, and often are, higher. You may find | more...

 
Mortgage Trends

November 7, 2022

Credit Score Rule Changes For Mortgage Loans

By Joe Wallace

On October 24, 2022, the Federal Housing Finance Agency (FHFA) announced its approval for participating lenders to use both the FICO 10T and the VantageScore 4.0 credit score models by Fannie Mae and Freddie Mac. These options would replace the previous use of “traditional” FICO score model Fannie and Freddie lenders use to approve the loans.  Why are we discussing Fannie and Freddie in an article about FHA home loans? There is a possibility that this move could wind up affecting other lending programs, especially if more borrowers choose Fannie Mae and Freddie Mac loans as the result of the changes. Other government loan programs may follow suit in the future, and in the case of FHA mortgages, some changes are already underway. These changes do not happen overnight. There | more...

 
Mortgages

April 5, 2018

More FHA Credit Score Questions And Answers

By Joe Wallace

In our previous blog post, we examined some common FHA loan FICO score questions and answers. Here are some more things you should know about FHA home loans, the FICO score requirements for them, and more. Is There A FICO Score Too Low To Be Approved For An FHA Loan? Lender standards will apply above and beyond FHA loan rules in this area. Technically speaking an FHA loan applicant with a FICO score of 500 or less is not eligible for an FHA-insured mortgage loan. Lender standards may be higher than this, however, and borrowers with FICO scores in the 500 range should seriously consider calling the FHA directly at their toll-free number 1-800 CALL FHA to get a referral to a local, HUD-approved housing counselor who can assist with | more...

 
FHA mortgage options

June 20, 2017

Low Down Payment FHA Loans

By Bruce Reichstein

What is the key to low down payment FHA loans? The answer might surprise you, especially if you’re a first time home buyer. Getting a mortgage loan means (in most cases) that the borrower must budget and save for a down payment, but the amount of that down payment can vary quite a bit depending on the lender. For conventional loans you may find down payment requirements between five and 20 percent. But with FHA home loans, that amount can be as low as 3.5% of the adjusted value of the property. For FHA loan applicants who have FICO scores that may be considered “marginal”, that down payment requirement may be adjusted to 10%. Why the higher down payment? FICO scores. Believe it or not, your credit rating can be | more...

 
what is mortgage insurance

April 17, 2017

FICO Scores And FHA Loan Approval

By Joe Wallace

How do FICO scores affect your FHA home loan application? A reader got in touch this week to ask a question in this area: “Hello, my credit score is between high 500s, low 600s. I make $8,000 a month. My mother in law said she would co-sign for my wife and I, her score is near perfect. Is this situation possible to get a loan for a home? She manages an apartment complex and pays no rent. Thanks for your time.” FHA loan rules in HUD 4000.1 state that a borrower is technically qualified for maximum financing (with a required minimum 3.5% down payment) with FICO scores at 580 or higher. Borrowers with FICO scores between 500 and 579 are technically eligible for FHA loans with a 10% minimum required | more...

 
Fair Housing Month

April 12, 2017

FICO Scores and FHA Loans: A Reader Question

By Joe Wallace

Can a co-borrower make up for another borrower’s FICO score issues? A reader asked us a question along those lines in our comments section recently: “My credit is not good enough to get a home loan. However, if my sister was willing to cosign for me to get a home can she sign? What are the requirements” FHA loan rules require all borrowers to be obligated on the mortgage to credit qualify. We get a glimpse at FHA loan policy in HUD 4000.1 page 132 which discusses “Minimum Decision Credit Scores” for all borrowers: “The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrowers credit report when all reported scores are the same. Where three differing scores are reported, the middle score is the MDCS. | more...

 

April 6, 2017

Credit Report Data, Disputed Accounts, and FHA Loans

By Joe Wallace

Borrowers are often advised to give themselves plenty of time in the pre-purchase planning stages to review credit report details to make sure there are no errors or outdated information. What happens if a borrower does see something on a credit report and chooses to dispute it? Ideally, issues like these should be caught very early in the planning stages. You should check your credit report as early as one year prior to the home loan application in order to give yourself enough time to dispute items if required. But not all borrowers have that much time to deal with such issues, and FHA loan rules address disputed accounts in detail. HUD 4000.1, the FHA single family home loan rule book, has two sections on disputed accounts-one for derogatory credit | more...

 
Can I get an FHA home loan if I owe back taxes?

February 22, 2017

Credit Score Questions

By Joe Wallace

Credit score issues are some of the most popular topics in our comments section-many want to know if their FICO scores are high enough to qualify for an FHA mortgage. One reader asked recently, “(Can) i can buy a (home using) FHA or HUD at a credit score from 500 to 579? With 10% down? How much is 10%?” This reader is referring to a recent blog post about FHA FICO score requirements which included the following: “FHA loan rules state that borrowers with credit scores at 580 or higher are eligible for maximum financing for FHA home loans, which requires a 3.5% down payment from the borrower. For those with credit scores between 579 and 500, 10% down is required.” The short answer to the reader question is that | more...

 
Will FHA Loans Let Me Rent Out My Home?

February 16, 2017

Credit Score Rules For FHA Mortgages

By Joe Wallace

There’s a common reader question about credit score rules for FHA mortgage loans that we get from time to time that goes something like this: “Is it possible to have a low credit score (500-600) and still get an FHA mortgage?” FHA loan rules state that borrowers with credit scores at 580 or higher are eligible for maximum financing for FHA home loans, which requires a 3.5% down payment from the borrower. For those with credit scores between 579 and 500, 10% down is required. However, these FICO score numbers are FHA loan minimum standards and lender requirements can be and often are higher. Credit score rules for FHA loans include the following instructions (see below) to the lender found in HUD 4000.1, the FHA single-family mortgage loan rule book. | more...