Articles Tagged With: Credit Issues

May 19, 2023

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...

May 1, 2023

How Important Is My Credit Score For An FHA Home Loan?

By Joe Wallace

How important is my credit score for an FHA home loan? It’s a question many ask, and it’s important to ask as early in the planning stages of your new home loan as possible. What do you need to know about credit scores and home loan approval? Credit Score Requirements Vary Depending On The Lender You will find that some lenders require certain credit score ranges while others have different standards. That’s a given-no two lenders are exactly the same. But did you know that even within a single financial institution there may be varying credit score requirements depending on the type of loan you seek? For example, FHA One-Time Close construction loans may require a different minimum credit score than an existing construction home loan. There are several reasons | more...

FHA Home Loans And First Time Home Buyers

March 16, 2023

Credit Advice Before Applying For A New FHA Mortgage

By Joe Wallace

Do you know how to get your own credit ready for a major loan application like an FHA mortgage? If you want to discuss your home loan options with a participating lender, you’ll want to have worked on your credit for a significant amount of time before your application or pre-qualification process starts. How much time do you need to get your own credit ready to apply for an FHA mortgage? Many sources say at least one year is ideal, and the credit reporting agencies themselves urge borrowers to take matters into their own hands and begin reviewing credit reports and monitoring credit. The shortest answer to the question, “Am I ready to apply for a mortgage” is, “It depends on how long you’ve been working on your credit.” If | more...

February 24, 2023

What Credit Score Is Needed For An FHA Mortgage?

By Bruce Reichstein

What is the minimum credit score required to get approved for an FHA mortgage loan? Readers ask questions about this issue all the time, sending in questions asking if it is possible to still get an FHA mortgage with a low credit score. FHA loan rules establish a minimum credit score for loan eligibility but lender standards also apply so this is a harder question to answer than you might think. What is best in these situations is to know that FHA loan rules are the baseline, the minimum. The lender’s requirements are also applicable so you will need to discuss what FICO scores qualify. In general, FHA loan rules in the FHA lender’s handbook say FHA borrowers with credit scores at 580 or higher are eligible for maximum financing | 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...

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...

April 14, 2022

Are FHA Credit Requirements For Refinancing The Same As Buying A Home?

By Bruce Reichstein

Are FHA credit requirements the same for refinance loans as they are for buying a new home? Many borrowers want to know if their credit scores, payment history, and other factors will be scrutinized as closely when refinancing. FHA loan rules for refinances vary depending on the nature of the new loan. The rules that govern this area are found in HUD 4000.1, the FHA Single-Family Loan handbook, and lender standards may also apply. The credit requirements we’re discussing here are FHA loan minimum standards. To know what a specific financial institution may require above and beyond these standards, you will need to talk to a participating FHA lender.FHA Loan Credit Check Requirements For Cash-Out Refinance Loans FHA loan rules in HUD 4000.1 state that cash-out and the no cash-out | more...

October 15, 2021

Credit Scores For An FHA Home Loan: When Low Credit Is Not Bad Credit

By Bruce Reichstein

Are you worried about your credit scores for an FHA home loan? When is a low credit score a reflection of bad credit behavior? FHA home loan rules specify that the lender must ensure a borrower as a 500 FICO score at the very minimum in order to qualify for an FHA mortgage, but your credit score numbers don’t tell the whole story. It’s true that FHA loan rule minimums for FICO scores do not always reflect the participating lender’s credit score requirements; borrowers are technically eligible for an FHA mortgage with the lowest possible down payment if they are applying with FICO scores at 580 or higher. The lender may require a credit score of 620 or higher for the same applicants. But your FICO scores only make up | more...

August 23, 2021

FHA Home Loans: Why You Need To Review Your Credit Report Now

By Bruce Reichstein

Why is it so important to review your credit report long before you apply for a mortgage? One important reason–the one you read in almost every article with advice on this topic–is to start reviewing your credit early in case you have to dispute an item on your report. But what happens in the event you find errors, outdated information, or evidence of identity theft? In the 21st century the likelihood of having any–or even all–of these in your credit report is elevated due to hackers, accidental breaches of personal data, or even mistaken identity. So what should a potential borrower do if they discover trouble with their credit reports? The first thing to do is to remember you’ll need to check all three credit reporting agencies to determine if | more...

Construction Loans For First-Time Home Buyers

June 18, 2021

Planning Your One-Time Close Construction Loan

By Bruce Reichstein

Some FHA loan applicants do not realize they have the ability to apply for a One-Time Close mortgage that lets the borrower build a home on their own lot instead of buying an existing construction home. The FHA One-Time Close (OTC) construction loan, like its’ VA construction loan counterpart, is a loan backed by the government that allows the borrower to apply for a single mortgage loan to cover both the costs of construction of a home from the ground up and the purchase of the home. This is offered as an alternative to construction loans that require two loan applications (one for construction, one for the completed home) and two closing dates. OTC Loans Have The Same Down Payment Requirements As Other FHA Loans The One-Time Close loan avoids | more...