Articles Tagged With: FICO Score Requirements

May 5, 2014

FHA Loan Reader Questions: Credit Score Minimums

A reader asks, “If a lender can want a higher credit score then FHA does, how do I find a lender that will work with me having a lower credit score? Mostly because if the lender is approved by FHA but don’t have to go by their guidelines doesn’t that make it that much more difficult for a low credit score individual to get a loan?” This question raises an important issue all FHA loan applicants should be aware of–FHA credit score minimums are just that. They are minimum requirements that lenders use as a benchmark, but the lender is free to require a higher credit score as long as that requirement is applied fairly and in accordance with federal Fair Housing Act laws. Let’s look at the FHA loan | more...

March 19, 2014

FHA Loans and Borrower Credit

By Joe Wallace

Some borrowers get nervous when applying for an FHA mortgage loan because of the credit check. There can be many reasons for this–some come to the house buying process with some history of credit problems, others may have disputes with creditors or other problems. Having credit issues in the past is not necessarily a barrier to an FHA loan in the present. But there are FHA guidelines for the lender you should be aware of that can help you better prepare for an FHA loan. The rules for FHA home loans found in HUD 4155.1 include instructions to the lender for analyzing borrower credit. Chapter Four of HUD 4155.1 has a section titled, “Past Credit Performance” and includes the following: “Past credit performance is the most useful guide to • | more...

February 24, 2014

FHA Loan Reader Questions: Refinancing Loans and Occupancy

By Joe Wallace

A reader asks, “We have a home for 25 years paid the first mortgage off and the we got a home equality line now ten years are up and the loans and it need to be refinance and the bank said because we done live in the house but my daughter and her husband do that won’t give us the loan again. Can we just get another mortgage on the house I don’t want to lose our house.” FHA loans for single-family residences do have an occupancy requirement–the borrower must live in the home as his or her “principle residence”. This is an important thing for FHA loan applicants to be aware of–FHA loan regulations include the borrower moving into the home and using it for the borrower’s personal use. | more...

February 3, 2014

FHA Loan Reader Questions: Death of a Co-Borrower

By Joe Wallace

A reader asks, “What happens if your parent co-borrows the loan with you, and they pass away at some point before the loan is paid off?” This is a fairly open-ended question and the answer is just as subject to interpretation because there’s no single law or regulation that applies in such cases. The first place a borrower should look for answers in such cases is the language of the FHA loan contract–what does the contract specify if such a contingency is mentioned? FHA loan rule policies are not the first place to start looking in this case for one simple reason–state law will definitely have something to say about some part of the process. Does the borrower have inheritance issues to deal with in addition to the FHA loan | 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 2, 2014

FHA Loan Reader Questions: FHA Loan Credit Score Minimums

By Joe Wallace

We’ve gotten several questions about FHA loan credit score requirements lately. Here are two of them. One reader asks, “I am a veteran…and in the past I have a lot of credit issues…I have cleared up most of them, but I am a federal employee who because of credit scores, rent year to year…what is the minimum credit score to qualify for FHA home loans…I am so tired of moving all the time….I know for a VA home loan it is now 640, a lot of help there…” Another reader asks, “My credit score is 615. My score has came up alot in the last year and a half. I own a single wide trailer with my ex husband. No one will refinance this single and I am wanting to | 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...

November 29, 2013

FHA Loans and Lack of Credit History

By Joe Wallace

Can a borrower be turned down for an FHA loan because of a lack of credit history? Recently we fielded a reader question about FHA loans that included the following line: “I do have older doctor bills that are outstanding but everything else I have saved and payed cash for, therefore making it unnecessary to have a credit card.” Would this lack of a credit card work against the FHA loan applicant? Before answering, it’s important to point out that a borrower’s credit activity, regardless of the type of credit (utility bills, rent payments, student loans, etc) must reflect a general pattern of reliability. A borrower that cannot show at least one year of on-time payments to all creditors in the time leading up to the new loan application may | more...

November 27, 2013

FHA Loans and Minor Credit Mistakes

By Joe Wallace

When some borrowers apply for an FHA loan for the first time, they may worry that past minor credit mistakes could hurt their chances at loan approval. Do these minor credit problems affect a borrower’s chances at an FHA mortgage? Or can the lender ignore certain minor credit issues if the borrower’s overall pattern of repayment and credit management is good? There is no simple answer to this question since the answer depends on the specifics of the borrower’s situation, but FHA loan rules in HUD 4155.1 do offer a few clues as to what you can expect in these cases. Any delinquent account must be investigated by the lender, even if in the end it doesn’t affect the application. According to FHA loan rules, “The lender must document the | more...

September 23, 2013

FHA Loan Reader Questions: Credit Scores, Loan Limits and Mortgage Insurance

By Joe Wallace

A reader asks, “The insurance for fha does it include in your morgtage or you have to pay that together with the downpayment? Do you know before you pick the house the amount you qualify for? How hard is it after one year of bankruptcy? I was laid off and did not work for close to two years due to the economy. how hard is it to get a lender with a score of 580???? Can closing cost be included in mortgage? This is a lot of questions, but the first and most important question is the matter of FICO scores. The reader asks how difficult it is to get a lender when the borrower has a 580 credit score. We can’t speak for all lenders, but in general a | more...