FHA mortgage Credit Requirements

FHA mortgage CREDIT REQUIREMENTS

Collections indicate a borrower=s regard for credit obligations and must be considered in the analysis of creditworthiness. In order for a mortgage applicant with collections in the past 24 months to be considered an acceptable credit risk, the underwriter must be able to assess that the collections were not based on a disregard for financial obligations or an inability to pay in a timely manner.

For the  FHA mortgage applicant the FHA mortgage program can simplify the purchase of a home, making financing easier and less expensive than a conventional home loan products. Some highlights of the FHA loan program include:

Minimal Down Payment and Closing costs.

• Down payment less than 3% of Sales Price Gifts are allowed
• Seller can credit up to 6% of sales price towards closing and prepaid costs.
• 100% Financing available
• No reserves required.
• FHA regulated closing costs.

Easier Credit Qualifying Guidelines such as:

•  
  • No minimum FICO score or credit score requirements.
  • FHA will allow a home purchase 1 year after a Bankruptcy.
  • FHA will allow a home purchase2 years after a Foreclosure.

www.FHAmortgageFHAloan.com

FHA Credit Qualifying Requirements

Bankruptcy: Chapter 7

-Discharged 2 years from the closing date.

-Must have re-established credit or chosen not to incur new credit obligations and no

derogatory credit after the bankruptcy in order to qualify for an FHA Mortgage.

 Bankruptcy: Chapter 13

-Filed prior to the application date.

-If bankruptcy is seasoned less than 24 months, the bankruptcy trustee must provide an

acceptable repayment history covering the length of bankruptcy.

-Must have re-established credit, or chosen not incur new credit obligations and have no

derogatory credit after the bankruptcy.

 Consumer Credit Counseling (CCC)

-The borrower must have completed CCC prior to the application date.

-A satisfactory payment history to the Counseling Agency must be included in the file if

the completion of the CCC is seasoned less than 12 months.

-Must have re-established credit or chosen not to incur new credit obligations.

 Foreclosure

-Must be seasoned a minimum of 3 years.

Credit Review on

AApprove/Eligible@ Collections:

-Collections are not required to be paid off unless it is required by DU. Outstanding

collections may be required to be paid if the underwriter determines they have the

potential to become a lien and impact the borrower=s ability to repay the FHA mortgage.

 Credit Review on

ARefer/Eligible@ Collections:

-Collections indicate a borrower=s regard for credit obligations and must be considered in the analysis of creditworthiness. In order for a mortgage applicant with collections in the past 24 months to be considered an acceptable credit risk, the underwriter must be able to assess that the collections were not based on a disregard for financial obligations or an inability to pay in a timely manner.

 http://www.fhamortgagefhaloan.com/does not require collections to be paid as part of the FHA home loan approval. However, the FHA underwriter must require collections to be paid that have the potential of becoming a lien against the subject property or becoming a liability to the borrower.

 Revolving and Installment Late payments:

-Past credit performance serves as the most useful guide in determining a borrower=s attitude toward credit obligations and predicting a borrower=s future actions. Whenanalyzing a borrower=s credit history, examine the overall pattern of credit behavior, rather than isolated occurrences of unsatisfactory or slow payments. When isolated delinquent accounts are revealed, the underwriter must determine that the slow payments were not due to a disregard for financial obligations or an inability to manage debt.