Am I eligible for an FHA mortgage? That is a very common question, but many borrowers have a specific reason for asking-they want to know if a certain credit problem or work/life situation might disqualify them from an FHA loan.
I Have A Recent Bankruptcy
Borrowers with bankruptcy issues will have to discuss their situation with a participating lender, but in general at the very minimum you will be required by FHA guidelines to wait a full year (called a “seasoning period”) before applying for a new loan. In some cases you may be required to wait longer, and lender standards apply above and beyond the FHA loan rules.
Getting a loan post-bankruptcy requires the applicant to have good credit habits post-bankruptcy, and in some cases you may need the court’s permission to enter into the debt. The short answer is, yes, you can qualify for an FHA loan but must wait out the seasoning period (which starts when the bankruptcy is discharged, NOT when it is filed) and work on your credit in the meantime.
I Already Own A Home
FHA home loans are not just for first-time home buyers, and borrowers are not penalized for having owned a home or for currently owning a home. However, FHA mortgages are for owner-occupiers, so it’s important to remember that when making plans to buy. You must occupy the property you buy with an FHA mortgage as your home address.
I Have A Non-FHA Mortgage And Want To Refinance Into An FHA Mortgage
This sort of FHA loan transaction is definitely possible. You can apply for cash-out or no cash-out refinancing to switch from a non-FHA loan to an FHA mortgage loan.
I Have Credit Issues
Credit issues can range from low FICO scores to missed payments, repossessions, and other financial problems. In general it’s best to apply for your new home loan with no fewer than 12 consecutive months of on-time payments for all financial obligations.
Late or missed payments or other credit problems in your record in the 12 months leading up to the loan can be very damaging to your chances for loan approval. In cases of repossession, loan default or foreclosure, the circumstances of such problems may be an important factor-the lender will want to know that the issues were a one-time problem and not the willful negligence or disregard by the borrower.
If you have credit issues, consider calling the FHA directly at their toll-free number (1-800 CALL FHA) to request a referral to a local, FHA/HUD approved housing counselor who can help you understand the credit requirements for the loan and how to prepare.