June 26, 2017

Vimeo Channel YouTube Channel

Articles in Category: Credit Issues

What is the average credit score needed to buy a house?

What Is The Average Credit Score Needed To Buy A House?

If you are a first-time home buyer, you’re likely asking a very common (and very important) question. What is the average credit score needed to buy a house? To get the answer, we decided to see what one of the three major credit reporting agencies, Experian, has to say on this subject. On the official Experian website, the answer to this question might surprise you: “There is no set minimum score to buy a house.” That’s right, you just read a direct quote from the official site of the credit reporting agency, Experian. But that statement does NOT mean there are no FICO score or credit score standards. Each lender has a set of credit score ranges it uses to determine creditworthiness. And many federally insured or guaranteed home loan | more...

 
FHA Loan Credit Score

FHA Loan Credit Score

Do you know what your credit score is? Do you know what lenders require in terms of an FHA loan credit score? The answer might surprise you. The short answer is that there’s a minimum FHA loan credit score requirement to qualify for the program, but lender FICO score requirements will also apply. FHA loan rules in the FHA Single Family Loan Handbook (HUD 4000.1) state that FICO scores of 580 or higher are required for “maximum financing”, which is the cost of the loan minus the borrower’s required 3.5% down payment. Borrowers with FICO scores lower than 580, but not lower than 500 still may qualify for the FHA loan program but with a higher down payment (ten percent). Remember, these are the FHA minimum standards, NOT individual lender | more...

 
FHA loan down payment

FHA Loans and Your Credit

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...

 

An FHA Mortgage Post-Bankruptcy?

Is a mortgage loan possible after bankruptcy? When it comes to FHA home loans the answer is yes, as long as the borrower meets FHA loan standards and sits out a mandatory waiting period (which may vary depending on the bankruptcy, state law, and lender standards). One reader asked a question this week about bankruptcy and FHA loans: “My credit rating is 677 as of 5/18/2017. My income is established by a job that Ive held for over 15 years. My bankruptcy was completed in July of 2011. Can I qualify for an FHA mortgage?” There are many issues at work in situations like these including whether or not the borrower has established a satisfactory pattern of credit activity following the bankruptcy action. The mandatory waiting period (under FHA standards, | more...

 

FHA Loan Questions: Credit Score

Do FHA loan rules require more than one credit score for a borrower to qualify for a mortgage loan? That’s what one reader wants to know this week: “Can you tell me if FHA can lend if someone only has one score? It’s a 621 score. This home buyer had a short sale four years ago and did not rebuild credit as she decided not to get any credit cards. She has a debit card and that is it. Please advise if one score would be accepted?” FHA loan rules for credit score requirements are found in HUD 4000.1, the FHA single-family home loan rule book. HUD 4000.1 has instructions to the lender for credit score requirements which include the following about what is called the Minimum Decision Credit Score: | more...

 
FHA loan

FHA Home Loans, Deed-In-Lieu, Foreclosure: A Reader Question

How do actions like deed-in-lieu of foreclosure or actual foreclosure affect borrowers and their chances at getting new FHA home loans? A reader asks: “I have a bankruptcy filed and discharged in 2012. My 1st and Heloc were not reaffirmed. I will be moving out of California and to Arkansas but want to know how FHA would look at the wait for purchasing if I: Surrender property in deed in lieu, or Allow the home to be foreclosed upon. Also would it make a difference if I applied before foreclosure is final since it is not reporting on my credit report (I would not be making payments if this is the scenario and staying with family)?” It is hard to answer questions like this without addressing certain implications or ambiguities. | more...

 

Old Credit Problems And FHA Loans

Do old credit problems come back to haunt you later when you fill out an home loan application? That’s basically what one reader asked us in the comments section this week: “If (a) charge-off was from a student loan account a decade ago that was delinquent, but paid in full from a tax-return offset six years ago, how is this viewed?” The reader is referencing some information we mention in a previous blog post, FHA Loan Standards: Charge-Offs and Collections, which includes the following information on how FHA loan rules instruct the lender to handle charge-off information found on a borrower’s credit report. The post includes a definition of what the FHA calls a charge-off account. “Charge Off Account refers to a Borrowers loan or debt that has been written | more...

 

Work Absences And FHA Loans

Can FHA loans depend on a borrower not having medical leave or temporary absences from work? That’s what one reader wants to know this week: “I was out from work one month do to a job related injury. Can I get an FHA loan? How long I have to wait to qualify? I have been working for the same company three years.” FHA loan rules may be non-specific on certain types of circumstances, preferring to defer to state law, lender standards, or other guidelines. However, this situation is not one of those. HUD 4000.1 specifically addresses the issue of temporary absences from the applicant’s place of employment. HUD 4000.1 describes this as a “temporary reduction of income”, stating: “For Borrowers with a temporary reduction of income due to a short-term | more...

 

FHA Loan Questions: Verifying Alimony and Child Support

FHA loan questions often come in our comments section after we’ve posted on a certain topic. Recently we wrote about how a lender is supposed to verify child support and alimony payments to a borrower who wants to use them as income: “I applied for a loan and my loan officer said I need proof of continuing payment for the next 3 yrs because my oldest son is 16 but will not graduate high school until after he turns 19. Would my court ordered support papers, my sons school records showing graduation year, and a copy of the law stating that he has to pay until he graduates be good enough proof?” FHA loan questions like these are proof that there’s still much work to do on explaining how FHA | more...

 

Bad Credit FHA Loans? A Reader Question

A reader got in touch about bad credit home loans in our comments section this week. “I am looking for companies/banks/ or mortgage companies that help people refinance during bankruptcy 13 and bad credit.” Does the FHA single family home loan program offer “bad credit” FHA mortgages? This reader comment/question shows that there are still some misconceptions about how the FHA loan program works. There’s no such thing as a “bad credit” FHA mortgage. Borrowers either qualify for the home loan or they don’t. But what are the actual standards for FHA loan approval? That’s complicated. There is a baseline minimum set of FICO scores that a borrower needs to have to even be considered under the FHA loan program. For maximum FHA financing with a required minimum down payment | more...