December 22, 2015
A reader got in touch recently to ask about FHA loan credit requirements and down payment assistance programs. That question includes the following:
“…My (FICO) score was about 500 for years till I finally am working with the Lexington Law Firm that I’m paying $99 a month that I have 3 negatives I still am owing but I see that now I have my score went up to 648 which is fair but I want to know about the loan.”
“Will FHA approves me to get a loan to buy a house in PA. But I’m not quite sure about AmeriDream that if I still can apply to make a down payment for the house?”
FHA home loan approval depends on a variety of factors, of which FICO scores are only one consideration. A lender must review a borrower’s repayment history on all financial obligations, and examine the applicant’s debt-to-income ratio to insure the loan is actually affordable based on FHA minimum standards and lender requirements.
A simple review of FICO scores won’t be enough for loan approval. The lender is basically looking for a pattern of reliable and on-time payments in addition to the score assigned the individual by credit agencies. So it’s impossible to speculate whether this reader would be approved or denied an FHA home loan.
Additionally, the reader asks about down payment assistance programs such as AmeriDream. These programs were cancelled in 2008 due to a passing of the Housing and Economic Recovery Act of 2008. That act, signed into law by President George w. Bush, prohibits these types of down payment assistance for loans backed by the Federal Housing Administration.
Borrowers can take extra time to save up down payment funds, and for assistance with pre-purchase planning in areas like this, contact the FHA directly at 1-800 CALL FHA and ask for a referral to a local, HUD-approved housing counselor who can help.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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