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FHA Loan Rules For Credit, Short Sales, Foreclosures: A Reader Question

July 21, 2014

017A reader asks, “My husband and I are looking to potentially buy a manufactured home already on some land. The home itself appears to meet the requirements stated above. The mortgage loan officer is stating that we do not qualify for a loan for a manufactured home due to my husband having a foreclosure seven years ago and I have a short sale three years ago. Is this correct, that due to our prior home financing circumstances, we are ineligible for an FHA loan for a manufactured home?”

The important thing to keep in mind with regard to questions like this is that FHA loan rules aren’t the only ones that govern the FHA loan transaction–lender standards also play a part.

FHA loan requirements for credit and other financial qualifications are the baseline–lenders are free to require higher standards and often do. The borrower asks, “is it true” that the circumstances mentioned may disqualify an application–the answer is essentially that, for this particular financial institution the answer is yes.

But not all financial institutions have the same rules, requirements, or basic minimum standards. You may well find another lender willing to work with a borrower’s circumstances based on current financial qualifications.

In all cases where a borrower has had a bankruptcy, foreclosure, short sale, etc. it’s important to work on building up a new credit history that would be acceptable to a lender–that includes making a minimum of 12 months worth of on-time payments for all financial obligations.

We don’t say this to imply the reader did NOT do this, but rather as a general rule of thumb all potential FHA borrowers should keep in mind when considering a new loan under such conditions.

Borrowers are encouraged to shop around for a lender to find the most advantageous terms and conditions, and in some cases, to find a lender willing to work with the borrower’s circumstances.

Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.


Joe Wallace - Staff Writer

By Joe Wallace

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.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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