Articles in Category: Credit Issues

February 6, 2023

FHA Loan Credit Score Issues

If you do not know your credit score when you start reading this article, it’s best to plan to pull your credit reports as soon as possible after reading. If you want to get properly ready for a home loan application, you should know your credit score, the contents of your credit report, and whether you need to challenge or correct information on your credit reports. FHA Loan Credit Standards FHA loan rules for credit and FICO scores are minimum requirements. The minimums acceptable to the FHA are a baseline for the lender who may add higher credit score requirements depending on a variety of circumstances. What we’re discussing here are the FHA rules, lender requirements will vary. The FHA “Minimum Decision Credit Score” (MDCS) HUD 4000.1 is the FHA | more...

December 14, 2022

Why Was My FHA Loan Application Denied In 2022?

By Joe Wallace

Are you in the process of getting ready for a home loan? There are plenty of home loan industry trends to pay attention to when you are in the planning stages of buying a home with an FHA mortgage. Among them are mortgage interest rates, home sale prices, and then there are the costs associated with the loan such as appraisals and title searches. Many industry players observe these trends. One of them is the Consumer Financial Protection Bureau (CFPB), which examines a variety of issues related to buying and owning a home on behalf of consumers. CFPB Reviews Mortgage Data In 2022 CFPB has published observations about the first and second quarters of 2022. Among those observations? The causes of home loan application denial during those periods. What were | more...

November 16, 2022

FHA Home Loans And Housing Counseling

By Bruce Reichstein

Even in the best of times, buying a home can be tough. It’s hard for first-time buyers to know what to expect, and in an era of rising interest rates and limited housing supply, it’s more important than ever to be a fully-informed borrower. FHA home loans are for many different kinds of borrowers. They are for experienced and first-time home buyers alike. But it’s easy to feel overwhelmed by the process if you are new to it or haven’t purchased real estate before. That is one reason why it’s a very good idea to consider talking to a HUD-approved housing counselor. Did you know you can call the FHA at their toll-free number, 1-800 CALL FHA, and request a referral to an approved housing counselor? The Department of Housing | more...

November 7, 2022

Credit Score Rule Changes For Mortgage Loans

By Joe Wallace

On October 24, 2022, the Federal Housing Finance Agency (FHFA) announced its approval for participating lenders to use both the FICO 10T and the VantageScore 4.0 credit score models by Fannie Mae and Freddie Mac. These options would replace the previous use of “traditional” FICO score model Fannie and Freddie lenders use to approve the loans. Why are we discussing Fannie and Freddie in an article about FHA home loans? There is a possibility that this move could wind up affecting other lending programs, especially if more borrowers choose Fannie Mae and Freddie Mac loans as the result of the changes. Other government loan programs may follow suit in the future, and in the case of FHA mortgages, some changes are already underway. These changes do not happen overnight. There | more...

October 5, 2022

FHA Home Loans And Rising Interest Rates

By Joe Wallace

Many potential borrowers wonder why mortgage loan interest rates are rising? While it may be true that FHA rates may be lower than some conventional mortgage loans, in a rising mortgage rate environment even government-backed mortgages will see rate increases. Why do rates go up in terms of overall cause-and-effect? Mortgage loan interest rates can rise for a number of reasons including changes in market conditions, investor reaction to those changes, breaking news at home and abroad, and government financial policy changes. All of these can directly or indirectly affect rates. At the end of September 2022, there was an increase in interest rates bringing them to the highest levels some have seen in years. The cause of these recent increases? You can thank an increase in the Federal Funds | more...

September 23, 2022

FHA Loan Credit Issues To Think About

By Joe Wallace

Credit scores are a very important part of qualifying for an FHA mortgage, but they are not the only factor to pay attention to. What follows is information about the other credit-related factors your lender will consider. To be sure, these factors may affect your FICO scores, but they are also viewed apart from your scores to determine your ability to realistically afford your mortgage. What are these factors? On-Time Payments Your participating FHA lender will review your credit report to see if there are late or missed payments, how many, and when they occurred. In general–and this is advice you will read on any mortgage blog or bank official site–if you have late or missed payments in the last 12 months, it can hurt your ability to get a | more...

September 7, 2022

Article Update: FHA Loan Rules On Late And Missed Payments

By Joe Wallace

Back in 2017, we published an article asking an important question. Is it possible to get an FHA loan application approved with late or missed payments on your credit report? Borrowers can get bogged down with financial difficulty in the best of times. In an economic environment that includes rising gas and utility costs, inflation, and employment woes this threat is greatly elevated. Back in 2017, we didn’t have the pandemic to worry about, but in more recent times this factor has severely complicated many people’s finances. If you get caught up in a struggle with common financial problems you may find some of the simplest situations–we are talking about late and missed payments on your recurring financial obligations–can have the biggest impact on a borrower’s credit rating or perceptions | more...

July 12, 2022

FHA Loan Rules For Self-Employed Borrowers

By Joe Wallace

What do self-employed house hunters need to know about the home loan approval rules applicable to self-employment income? If you are not sure how your FHA lender will qualify you based on your income, keep reading–there are some important facts you will need to know before you fill out FHA loan paperwork. The first thing to know is how the FHA defines “self-employment” and why. The lender is required to ensure your income is stable and reliable and that you will continue to earn that income to help pay for your mortgage. The FHA has different qualification rules for self-employment income; you are basically required to show two years of self-employed income in a similar line of work to your salary, commission, or hourly income when you were not self-employed. | more...

July 6, 2022

Will My FHA Home Loan Application Be Approved?

By Joe Wallace

Will my FHA home loan be approved? That is a common question for some borrowers who worry that their credit isn’t good enough for a home loan, and for borrowers who may have adverse credit information in their credit history. There is no single answer to this question since much depends on the borrower’s credit history, their patterns of credit use, debt ratios, and other factors. But in general there are some areas you can review to determine whether or not an FHA home loan is in your future. Will My Home Loan Be Approved? Occupancy Matters If you seek an FHA mortgage for a house that you (or at least one borrower obligated on the mortgage) do not intend to occupy as your primary residence, you will not be | more...

April 28, 2022

Preparing For An FHA Mortgage Loan

By Bruce Reichstein

Applying for an FHA home loan doesn’t happen overnight–it takes time to plan, budget, examine your credit, and save money for the fees and expenses associated with an FHA mortgage. If you’re new to the home buying process and don’t know where to start, a very good way to begin to get an idea of how much home you can afford with your present income, debts, and financial obligations. Do you want to know how much you can borrow, and how much your payments might be? You can use an online mortgage loan calculator to estimate these amounts. Remember that the amount of the loan you might qualify for and the amount of mortgage payment you can actually afford may be two different things altogether, which is why many web-based | more...