October 2, 2013
We get a lot of questions about FHA loans and bad credit. One of the latest examples comes from a reader who asks;
“I am wanting to buy me a single family home but my credit is messed up. I know my score is bad! I am a single mother with 4 kids and I want my own house. I am in need of help on which way to go. Do I need to file chapter 13 or 7 or is there a way to get my credit fixed so that I can make another one of my dreams come true? Help me please.”
While we cannot advise or answer questions on issues that fall outside how FHA loans work and their related issues (appraisals, Private Mortgage Insurance, etc.) we can say that the FHA does have resources that can help borrowers in this situation to get answers and advice on how to proceed.
Bad credit FHA loan questions are plentiful, but the answer is always the same–FHA credit requirements are MINIMUM requirements and a lender is free to require a higher credit score or a more dependable loan repayment history as long as those requirements are applied in accordance with Fair Housing laws. The FHA does say that FICO scores below 500 render a borrower ineligible for an FHA loan. But many lenders won’t work with borrowers with FICO scores below 620.
The best thing a borrower can do in circumstances like these? Call the FHA directly and ask for a referral to an FHA approved housing counselor. Borrowers can get housing counseling and advice and learn what to do in order to become a better credit risk.
The FHA toll-free number is 1-800 CALL FHA. Borrowers should know that the FHA itself does not offer this type of counseling, instead you will be referred to an FHA approved agency near you.
Do you have questions about FHA home loans or refinancing loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: