Articles and news about FHA loans and HUD requirements. FHA loans are great for first-time homebuyers.

Can I Get an FHA Loan Even Though I

Conventional loans can be unforgiving when it comes to credit scores, credit history, bankruptcy and foreclosure. In the current housing market, credit requirements on conventional loans are tougher than ever. One of the reasons government home loans are so popular is because FHA guaranteed loans are more lenient and flexible where credit is concerned.

The FHA even allows applicants to re-establish credit with an FHA loan even if they have previously declared bankruptcy or had a foreclosure. There are strict rules that cover these situations, but for those who qualify, the FHA mortgage is an excellent way to start over, reestablish credit and become a homeowner once more.

What does the FHA require in cases of bankruptcy? In keeping with the FHA requirements that lenders issue credit only to those who have established reliable payment patterns, applicants must apply no earlier than two years since the bankruptcy has been discharged and all judgmental associated with that bankruptcy must be paid in full. If there are outstanding tax liens, they must be satisfied or there must be an established repayment plan with the IRS or the appropriate State Department of Revenue.

In the case of foreclosure, the FHA rules state the buyer must wait a minimum of three years since foreclosure proceedings or a deed-in-lieu of foreclosure.

These rules apply whether you are applying for a new FHA mortgage or you’re trying to assume an FHA home loan. Assuming an existing loan still requires a credit check and other underwriting required by the FHA. In the meantime, any other documentation you can provide to show proof of on-time bill payments since resolving a bankruptcy or foreclosure can be important. Even at its most lenient, the FHA still requires proof the borrower is a good credit risk after an applicant’s
successful recovery from a wost-case financial situation.

6 Responses to Can I Get an FHA Loan Even Though I

  1. Patricia Bogar says:

    My house was sold on a Short Sale. I have to be out by Sept 25, 2012.
    I am looking at renting and rents will be at least $650./Mo. I see condo’s for sale at $25K where the mortgage would only be less than $300 a month. I live on S.Security and have $1110.00 a month and could afford very well a payment of less than $400 a month if I could find someone to finance a condo for $25K. Can you help?

  2. Dan says:

    can i get an fha loan if i had a foreclosure on a fha loan 3 years ago due to a divorce.

    • Joe Wallace says:

      The required waiting period for foreclosures with many lenders is three years–you’ll definitely want to have worked on your history of payments and credit since the time of your foreclosure before applying. At least 12 months of on-time payments for all bills is a very good start.

  3. John Wilkerson says:

    I had a foreclosure on a investment property, conventional loan 1 year ago. I want to acquire a HECM loan, can I qualify with the foreclosure.

    • Joe Wallace says:

      That may depend on a variety of factors including your age. FHA HECM loans are for borrowers aged 62 or older who own their home outright or have only a few payments left. If you qualify in these areas, you can discuss lender requirements regarding foreclosure and the mandatory waiting times with your lender.

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