Articles in Category: Credit Issues

November 8, 2023

Credit Scores For Home Loan Approval

What credit score do you need to be approved to buy a home? The answer to that question can change depending on the type of home loan you seek and the options you want. For example, FICO score requirements to be approved for a manufactured home loan may be lower than those who want to build a home from the ground up using a One-Time Close construction loan due to elevated risk to the lender. Construction loans are higher-risk transactions for a participating lender than manufactured homes. That means the FICO score requirements from your lender are likely to be different than a government-backed home loan program’s minimums. What FICO scores do you need to be approved to buy a home? FHA FICO Score Requirements FHA loan guidelines say FICO | more...

October 24, 2023

Get A Free Credit Report Before Applying For An FHA Loan

By Joe Wallace

Are you considering an FHA mortgage, an FHA refinance loan, or even a reverse mortgage? It is essential to take the right amount of time to prepare for your FHA loan before filling out the application, and that means knowing what your credit report says long before you start the process. You want to know the contents of your credit report to ensure there is no identity theft, inaccurate information, or other problems. However, many borrowers don’t know how to get copies of their credit report. Free Credit Report From Major Credit Reporting Agencies All consumers are entitled to a free credit report every 12 months. This report is available from each of the three credit reporting agencies. Those agencies are Equifax, TransUnion, and Experian. The U.S. government’s Consumer Financial | more...

September 7, 2023

Preparing For An FHA Home Loan

By Joe Wallace

We get a lot of questions about preparing for an FHA loan. Some of the most popular topics? Credit scores, what it takes to get loan approval, and whether it’s good to wait out the current high interest rates we are experiencing at press time in the fall of 2023. There are many sources of credit advice, especially advice on how to prepare your credit ahead of a major application like an FHA mortgage. But what do the credit agencies themselves say about how to become more creditworthy ahead of a home loan application? How should you prepare? Improve Your Chances At Home Loan Approval There is some interesting advice from one of the “big three” credit reporting agencies, Experian. That credit agency recommends you start as early as possible, | more...

August 21, 2023

Buying A Home In Today’s Market

By Joe Wallace

In August of 2023, many news outlets reported a competitive American housing market with high demand and low inventory still influencing the market. Low inventory today could be partly the result of many house hunters purchasing homes while home loan interest rates were low and hanging onto the property for the long haul. There are other factors, but for most home buyers, a central issue is today’s high interest rates and how much that will affect the overall cost of the loan. What do you need to know about home buying in today’s housing market? Refinancing When Rates Fall Do you need to buy now? If you cannot wait to purchase property and aren’t inclined to sell or get a cash out refinance option, there are other ways to reduce | more...

August 11, 2023

FHA Loan Rules For Borrowers With Non-Traditional Credit

By Joe Wallace

FHA loans have flexible standards regarding the kinds of credit history a borrower brings to the loan application process. By that, we mean that applicants who have non-traditional or even insufficient credit history may be able to get a loan approved depending on the circumstances. Getting a loan with insufficient credit history is harder, but borrowers can call the FHA at 1-800 CALL FHA to get a referral to a local housing counselor who can provide advice. Applying For An FHA Loan With Non-Traditional Credit Borrowers with non-traditional credit or insufficient credit history may be asked to provide additional documentation and paperwork as part of this process. You could be required to furnish tax documents, utility bills, and/or any other recurring payment that could help establish credit history. FHA loan | more...

August 7, 2023

FHA Loan Reader Questions: Foreclosure Wait Periods

By Joe Wallace

Here is a variation on a common reader question. “I had a foreclosure on my house. What is the waiting period before I qualify for an FHA mortgage?” The first thing to do is call the FHA at their toll-free number, 1-800 CALL FHA, and ask for a referral to an FHA/HUD-approved housing counselor in your local area. A housing counselor can assist in areas like this with advice on how to proceed toward becoming a homeowner once again after a foreclosure, bankruptcy, job loss, or other issues. The answer to the reader’s question varies greatly depending on circumstance, lender standards, and whether or not the home foreclosed upon was purchased with an FHA mortgage. While the FHA loan program does include options for borrowers who have experienced a qualifying | more...

August 1, 2023

How Much Can A First Time Home Buyer Borrow With An FHA Home Loan?

By Joe Wallace

It’s a simple question. How much can you borrow using an FHA mortgage? The answer to that question isn’t as simple as some would like. Why? Because the amount you are allowed to borrow is informed in part by FHA loan limits for the area you want to buy the home in, by the appraised value of the home, and by how much of a down payment you may be required to make. FHA Loan Amounts And Cash Back At Closing Time It’s necessary to dispel some new house hunters’ illusions about home loan limits. When you buy a house with an FHA mortgage, you aren’t allowed cash back at closing time except for refunds. If you are approved for a loan amount, and the actual amount of money needed | more...

July 13, 2023

FHA Loan Approval and Late or Missed Housing Payments

By Bruce Reichstein

What is the connection between FHA loan approval and late or missed housing payments? The simplest formula given to most borrowers is that you should come to the home loan application process with nothing but on-time payments on all financial obligations for the last 12 months leading up to the day you apply. Not all borrowers take that advice, and many want to know what the consequences of having a late or missed payment might be; in some cases the issue may be more problematic than others. This is true of having late or missed housing payments on your record. The lender will review your record of housing payments as one of the indications that a borrower is a satisfactory credit risk. But what do the FHA loan rules tell | more...

July 11, 2023

FHA Loan Options Post-Bankruptcy

By Joe Wallace

There is a common reader question that goes something like this: “I had a bankruptcy discharged recently. How long do I have to wait to purchase another home? I have been working on my credit and improving my scores.” Post-bankruptcy, a borrower must work hard to establish the best credit possible in order to qualify for a new home loan. Lenders may be willing to work with borrowers with credit scores starting at around 620 or higher. But credit isn’t the only factor determining how soon after bankruptcy you can apply for a home loan. The nature of a borrower’s wait time to apply after bankruptcy depends on the nature of the bankruptcy. The rules governing this are found in the FHA Single-Family Lender’s Handbook, which advises that bankruptcy “does | more...

June 6, 2023

Alimony and Child Support: FHA Loan Rules

By Joe Wallace

FHA loan rules permit alimony and child support to be counted as verifiable income for borrowers who receive it and who choose to list it in their income sources. Like all other sources of income, the rules in HUD 4000.1 state the lender is responsible for verifying the income through documentation such as court agreements or other paperwork. Receiving this income can help you qualify for a home loan, but what about FHA loan applicants responsible for paying alimony and child support? Does this count against a borrower’s debt ratio? HUD 4000.1 says yes, lenders must count alimony and child support payments as recurring debts. The FHA loan rule book gives the following instructions to the lender: “For Alimony, if the Borrowers income was not reduced by the amount of | more...