What are General Qualifying FHA Credit Requirements?

When applying for a mortgage through the FHA, credit is a concern. Generally speaking, a credit score of at least 620 will be necessary to qualify for an FHA loan, although there are some instances where a slightly lower credit score of 580 would be acceptable. The FHA usually insures loans for other lenders, so they want to look at your credit history to be certain you are able to meet your debt obligations and that you have done so in the past. The absence of a credit record or the existence of a bad one, however, will not necessarily disqualify you from getting a loan approval. 

Lenders Don't Care

It is important to understand that a lender does not know what circumstances surround your late payment, your partial payment, or the lack of a payment all together. It's not their job to care. It's their job to report to the credit bureaus that you missed your commitment. When you apply for an FHA loan, they will take a close look at your overall credit patterns to see if there are consistent payment patterns. If effort is made, they may be willing to look past a period of late payments. They are willing to listen if you can provide proof of illness, job loss, or other extenuating circumstances, and they may be able to approve the loan in spite of those issues. The important thing is that you are able to prove current ability and willingness to pay the debt now, and show that the reason the debt was not paid before was under a sustainable circumstance. 

Building a Credit File

If you do not have sufficient credit, a file of at least two years, you may still be able to get approved through other means. Providing statements for utilities, such as cable, phone, and power will be able to show that you can meet those payment obligations and are willing to do so. What is acceptable will be up to the individual underwriters for the FHA backed mortgage company, so it is important to ask and follow their specific requirements. 

Bankruptcy and Foreclosure

If you have recently filed for bankruptcy, you will likely be denied for a loan. Generally speaking, applicants should wait at least two years before filing for an FHA loan. If there is a Chapter 13 bankruptcy on file and you can show your payments have been made on time every time for the last 12 months, you may still be considered for loan approval. If there has been a recent foreclosure on your credit, you will likely be denied for the loan, as it should be at least three years after a foreclosure before you apply for FHA credit.

Those who have little to no credit problems will be able to get approved for an FHA loan easily. These loans are typically 30 year fixed loans with a lower interest rate. Depending on the credit situation, little to no down payment may be required.

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