August 20, 2017

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Articles in Category: Credit Issues

What does my FHA lender look for in my credit report?

What Does My FHA Lender Look For In My Credit Report?

What does my FHA lender look for in my credit report? That is a very good question to ask, and the earlier in the home loan planning stages you ask, the better off you’ll be. It’s highly recommended that home loan borrowers get copies of their credit reports in the year leading up to a home loan application. You want to know what your credit history says about you before you submit that information to your loan officer. FHA Loan Rules For Credit Reports Your lender is required by the FHA loan program to pull your credit reports, and to use “traditional” credit reporting wherever available. Some borrowers do not have credit, or have non-traditional credit histories. According to the FHA loan handbook, HUD 4000.1, the lender is required to | more...

 
Is my credit good enough for an FHA home loan?

Is My Credit Good Enough For An FHA Home Loan?

Is my credit good enough for an FHA home loan? Borrowers need to know what FHA loan minimum credit standards are, but they will also need to find out what their participating lender’s credit requirements are above and beyond FHA loan minimums. FHA Minimum Standards For FICO Scores The FHA loan handbook, HUD 4000.1, lists the criteria the FHA requires to qualify for a home loan. For most FHA mortgage loans, borrowers who have FICO scores of 580 or higher qualify for maximum financing with the lowest down payment possible (3.5% of the adjusted value of the home or the purchase price, whichever is lower). Borrowers with FICO scores between 500 and 579 may technically qualify for an FHA mortgage, but with a minimum 10% down. Borrowers with FICO scores | more...

 
Which Credit Score Will My Lender Use For My Home Loan?

Which Credit Score Will My Lender Use For My Home Loan?

Which credit score will my lender use for my home loan? There is understandably some confusion over this issue; there are three major credit reporting agencies, and multiple credit scores possible. How does your lender know which score(s) to use? When it comes to FHA mortgage loans, the FHA loan handbook has instructions for the lender on how to proceed when evaluating a borrower’s credit scores. One page 132 we learn: “The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrower’s credit report when all reported scores are the same. Where three differing scores are reported, the middle score is the MDCS. Where two differing scores are reported, the MDCS is the lowest score. Where only one score is reported, that score is the MDCS.” | more...

 
Where Can I Apply For An FHA Loan?

Where Can I Apply For An FHA Loan? Part Two

In our previous blog post about getting FHA loans, we discussed what a participating FHA lender is, and why you might not find the same types of FHA loans from lender to lender. Where can you apply for an FHA loan? Through a participating FHA lender who offers the type of home loan you need. But there’s more to this than just seeking and finding the right financial institution. Get Pre-Approved For An FHA Loan When you find an FHA lender who offers the type of loan you need (new purchase, construction loan, condo loan, etc.) be sure to ask about the pre-approval process and what it takes to get pre-approved. Doing so can help you a great deal-you’ll have a better idea about the rough amount of loan you | more...

 
Who can qualify for an FHA loan?

Who Can Qualify For An FHA Loan?

Who can qualify for an FHA loan? The answer surprises some people, thanks to some misunderstandings about who the FHA single family home loan program is for, and who can use it. FHA home loans are for any financially qualified borrower. You don’t have to earn a minimum amount of money, and there is no maximum income limit for FHA mortgages. While it’s true that FHA loans can be less expensive than their conventional mortgage counterparts (in terms of interest rates, no penalties for early payoff, etc.) these loans are not specifically targeted at people who “can’t afford conventional mortgages” or to those with an economic disadvantage. Hence, there’s no maximum income limit. There’s also no preference given by the FHA for first time home buyers, though a particular lender | more...

 
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...

 
What is an FHA loan limit?

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...