Articles Tagged With: FICO Score

June 12, 2014

FHA FICO Score Requirements: A Reader Question

A reader asks, “I was told that i could qualify for a FHA loan with a credit score of 608. I am a first time home buyer. Is the information I was given true?” It may sound glib to say that the answer depends on who told you, but in this case that is true. Technically speaking FHA loans are available, according to FHA loan standards in HUD 4155.1, to those in the FICO score range the reader is asking about. However, the FHA loan rules are not the only ones at work in these case. Lender FICO standards can be, and ofter are, higher than the FHA rulebook minimums. This is allowed and there’s nothing wrong with a lender who requires a higher FICO score as long as those | 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...

March 13, 2014

FHA Loans and Credit Scores: A Reader Question

By Joe Wallace

A reader asks, “I have a credit score of 582, I made pretty poor financial choices in my 20′s and am working to improve my credit. I make an average of 72,000 a year now and my credit hinders my every move. I want to purchase a home and feel that no one will even consider me for a loan because of my credit.” “This would be my first time buying. Are there any recommended lending companies that will work with my sort of situation. I would prefer an FHA loan so I can qualify for the down payment assistance but I know I can’t ask for too much given my circumstances.” Borrowers in these circumstances should definitely begin with some good advice from a HUD-approved housing counselor. The FHA | more...

February 28, 2014

FHA Loans And Credit Scores: More Lenient Now?

By Joe Wallace

Are FHA home loans getting easier to come by? According to one report in the L.A. Times, the answer is yes. Several sources are reporting that average credit scores on FHA mortgages has “declined steadily”. Combine that with a trend towards higher debt-to-income ratios among borrowers and you have indications that lenders in general may be easing their standards. For many years, the minimum credit score many lenders would need to approve an FHA loan was between 620 and 640. But with reports of some financial institutions approving FHA mortgages with scores at 600–still well within the FHA guidelines for loan approval–it seems the lending environment has gotten friendlier to borrowers with credit scores in this range. According to the L.A. Times report, “The FHA theoretically allows credit scores as | more...

February 7, 2014

FHA Loan Qualifications And Old Credit Problems: A Reader Question

By Joe Wallace

A reader asks, “I have the income qualifications, the credit score qualification, and the down payment amount. However I also have outstanding amounts from old debt collection agencies. Do old debt collections really matter if I have everything else? Do the amounts of these old collections matter also?” The answer to this reader question isn’t as simple as a yes or no reply–there are a number of factors that may apply. How large the old collections could be one of those factors, the nature of them, and how old they are may all factor into the equation. Lender standards would also play a part–some lenders may or may not be as forgiving as others depending. All that said, let’s examine what FHA loan rules say about the matter in HUD | more...

January 28, 2014

FHA Loan Rules: Non-Occupying Co-Borrower Requirements

By Joe Wallace

In a recent blog post we discussed the rules for FHA loans where a non-occupying co-borrower was involved. The scenario we discussed specifically was a parent buying a home with a child (FHA loan rules permit this under the right circumstances), but in general there are FHA mortgage loan rules that apply whenever a non-occupying co-borrower is present. In general, unless the non-occupying co-borrower is a family member, FHA loan rules in HUD 4155.1 say, “When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV).” The rules provide an exception to that restriction when the co-borrower is: “related by blood, marriage, or law, such as − spouses − parents-children − siblings | 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...

December 17, 2013

FHA Loan Reader Questions: Late Payments on Credit History

By Joe Wallace

A reader asks, “My wife and I have already completed home inspection,down payment and now must apply for FHA. We have already been officially told we qualify by score and income. I would like to know when mortgage companies look back at credit history and notice at least 3 creditor with late payments on them but I have the backing that I was in combat and wounded and not able at the time to pay it on time. I am 100% Disabled with VA award letters, can the company allow this as an acceptable excuse for not paying on time?” FHA loan rules on credit history are found in HUD 4155.1, Chapter Four Section C, which says: “Past credit performance is the most useful guide to • determining a borrower’s | 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...