Articles Tagged With: FICO Score Requirements

February 17, 2016

FHA Loans and Credit Issues

We get many questions in the comments section about credit requirements for FHA mortgage loans and refinance loans. Borrowers want to know if their credit scores are good enough, whether late or missed payments could be a factor in loan approval, or whether or not a certain type of income is acceptable for an FHA mortgage loan. In general terms, some credit issues depend on the lender. For example, FHA loan standards permit FICO scores below 600, but lenders tend to approve loans for borrowers with FICO scores in the mid-600s. The higher standards are lender requirements and this is allowed under FHA loan rules as long as the lender applies the higher standards in accordance with federal law. Lenders may require higher down payments from borrowers who don’t meet | more...

January 13, 2016

FHA Home Loan Questions: FICO Scores

By Joe Wallace

A reader got in touch recently in the comments section to ask a question about FICO scores and FHA home loan applications. “My new wife’s credit score is 749 and mine is 620 due to an ugly divorce and transfer several years ago. We make over 287K per year with very little debt. Would we qualify for a loan together with a favorable rate? All debt paid except car loans.” This question implies that FICO scores are the deciding factor for an FHA loan approval decision, and while credit scores are very important, they are not the only factor taken into account by the lender. When you apply for an FHA home loan, the lender will examine not just your FICO scores, but your history of payments–especially those made in | more...

December 17, 2015

HUD 4000.1 On FHA Mortgage Loan Credit Score Requirements

By Joe Wallace

When you apply for a mortgage loan to purchase a home, your lender will require you to sign paperwork authorizing your loan officer to run a credit check on all parties to be obligated on the mortgage. FHA loan rules in HUD 4000.1 spell out the minimum FICO score standards and requirements. Do you know what the minimum FHA loan standard is for FICO scores? According to HUD 4000.1, the lender must analyze FICO scores in a specific way. Many borrowers wonder how, if the lender is getting multiple credit reports from the three major credit reporting agencies (Equifax, TransUnion, and Experian), will the lender interpret differences between those scores? HUD 4000.1 states: “The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrowers credit report | more...

December 1, 2015

FHA Loans And HUD 4000.1: What The Lender Must See In Your Credit Report

By Joe Wallace

Ever since the new FHA home loan rules for single-family mortgage loans were published in HUD 4000.1, we have been reviewing the new rules and publishing some of the most pertinent changes in policy, restatements of existing policies, and new FHA home loan rules. The FHA and HUD did rewrite, revise, and change portions of the rulebook to update, improve, or clarify those sections. One area that’s important to know about HUD 4000.1 is its instructions to the lender about credit reports. Do you know what the lender must look for, according to HUD 4000.1, in your credit report? To begin with, HUD 4000.1 instructs the lender, “Credit reports must contain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in | more...

October 13, 2015

FHA Loan Credit Questions: Delinquent Rent Payments

By Joe Wallace

A reader asked us a question in the comments section recently about FHA loan applications and missed payments. “I have let family members rent 2 apartments in my name and they left them early which left me with the bill–will that keep me from qualifying for a FHA loan?” The answer to this question depends on several things. Was this simply a case of breaking a lease? If so, was the rent paid on time before the lease was broken? If there are late or missing payments, that could be an issue depending on circumstances, the lender, and whether the payment issue was ever resolved. Any debt in the borrower’s name would be examined by the lender, even if it was to help out another family member. Co-signing is also | more...

September 22, 2015

FHA Loans And Federal Debt

By Joe Wallace

Here is a common type of question about applying for an FHA mortgage loan when you have owe a debt to the federal government: “Can anyone tell me what the guideline for FHA loans regarding payment plan with IRS when you do not own property and you owe taxes? ” FHA loan rules here are basically concerned with giving lenders a yardstick to measure a borrower’s creditworthiness with regard to federal debt–and that means that a lender is responsible for insuring the borrower is not delinquent on the payments of that debt. Borrowers who are delinquent and are shown to be delinquent through the lender’s due diligence are not eligible for an FHA mortgage loan until such time as they have corrected the delinquency to the satisfaction of the government. | more...

What happens to my FHA loan in a natural disaster?

September 8, 2015

What Can Hurt My Chances For FHA Loan Approval?

By Joe Wallace

There has been a lot written about how FHA home loans work, and what it takes to get approved for an FHA mortgage. Knowing what the lender expects from your loan application is one thing, but knowing what could hurt your chances for loan approval can be just as important. FICO scores are obviously one of the main initial concerns for the lender–you may find lenders who want FICO scores of 620 or higher. But those credit ratings aren’t the only thing that affects that first impression factor. Coming to the FHA loan process with any late payments on your credit history in the last 12 months is not recommended–anything less than a solid record of on-time payment on all financial obligations for the previous 12 months can hurt your | more...

August 25, 2015

FHA Mortgage Rate Trends: Slightly Lower As Stock Market Varies

By Joe Wallace

Mortgage rates were, in the eyes of some observers on Monday, quite conservative in the shadow of stock market ups and downs. Rates did creep a bit lower, putting 30-year fixed rate conventional mortgages solidly into 3.875% territory, best execution. That eliminates the previous range of best execution rates for 30-year fixed conventional rates that saw 3.875% at the low end. FHA mortgage loan rates are still in their comfort zone of 3.75% best execution, though as always rates may vary more among participating FHA lenders. Best execution rates are not available to all borrowers or from all lenders–your experience may vary depending on your FICO scores and other financial qualifications. The availability of a participating FHA lender may also play a role in your access to rates like theses. | more...

August 5, 2015

FHA Condo Loans: Eligibility Rules For Adding Condo Projects To The FHA Approved List

By Joe Wallace

We get frequent questions about FHA condo loans–are they available? What are the rules? It is true that FHA mortgage loans are available for condos, town homes and other properties that aren’t typical suburban homes. Condo loans have special rules due to the unique nature of these building projects. The communal residency issues associated with condos (homeowner associations, shared roof repair costs and related upkeep issues, for example) requires any condo project for consideration for an FHA mortgage loan to conform with certain guidelines, which is why all condo projects must be on or added to the FHA approved list before a home loan can be approved for a unit in that project. How does a condo get added to the FHA approved list? Before any decisions can be made, | more...

August 1, 2015

FHA Mortgage Loan Interest Rate Trends: 60-Day Lows

By Joe Wallace

Mortgage loan rates have been in a recovery mode of sorts over many days–tiny increments of rate improvements have brought closing costs down over time but the basic best execution rates we’ve been reporting on here haven’t changed–until Friday, when a weaker-than-expected jobs data report brought a more dramatic move lower for mortgage rates. The move was sharp enough to pull both conventional 30-year fixed rate mortgage loan interest rates and FHA loan interest rates out of their previously reported best execution range of rates and back into a single number on Friday. Conventional 30-year fixed rate mortgages are now reported at, best execution, 4.0% with some more aggressive lenders offering borrowers with the best FICO scores and credit histories rates in the high three percent range. FHA mortgage loan | more...