FHA Loan Credit Requirements

"Find out the FHA loan credit requirements..." by: Leslie Collins - 3/2008

FHA rules regarding your credit history - Many borrowers with credit trouble in the past may have a tough time qualifying for a conventional loan. The good news is FHA loan credit requirements are much forgiving regarding your past credit history making it much easier to purchase a home you may not have qualified using a conventional loan program. Here are the basic FHA loan credit guidelines:

NO Minimum FICO

FHA doesn't require a specific FICO score to qualify. However, some lenders who offer FHA products may require a minimum credit score of 575. It's really up to the lender. Inquire.

2 Lines of Credit Needed

You should have at minimum 2 open credit accounts ( credit card, auto payment student loan etc…) in good standing. If you have no credit accounts or FICO score, no problem... FHA allows you to use Non-traditional credit references. For example, if you are a renter and can prove on-time of your rent, utilities, or auto insurance that may be OK.

Late Payments OK

This is where FHA beats the conventional credit mentality. Late payments on any credit obligations may be ok if they are isolated one-time events. FHA looks at your overall payment trend, and willingness to pay. One or two late payments will probably not disqualify you.

Collections OK

Collections are OK. Per the HUD guidelines, you do not need any collections to be paid in full to qualify for an FHA loan if they are minor in nature.

No Federal Debts

Did Uncle Sam pay your way through school - who didn't! If so, don't miss any payments on your student loan. You will not qualify for an FHA loan if you are late on any Federal debts.

Judgements - Disallowed For FHA

Judgements need to be paid. The borrower needs to prove that payment arrangements for any judgements have been implemented.

Foreclosure - OK

FHA allows foreclosures.FHA allows foreclosure on your record as long as it's not within the previous 3 years.

Bankruptcy- OK

Chapter 13 bankruptcy - you can qualify for an FHA loan if you can prove you have adequately been making payments for at least one year. Approval by the courts trustee to finalize the loan. Typically, a full explanation of the bankruptcy is required and job stability is required. Chapter 7 bankruptcy - discharge date must be at least 2 years old. A full explanation of the bankruptcy is required as well as job stability.


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