Personal Credit

FHA will take into account your past credit history or lack of history; in determining your loan approval. To fully understand if you are qualified you should apply and the FHA lender will review your particular history and let you know if you would be approved or not. If not they can help in steering you in the right direction so that you would be approved later!

FHA is not credit driven but there are guidelines:

Alternative Credit; Equals No Credit History:

For Alternative Credit you would need 3 to 4 trade lines that you can prove. Acceptable lines would be; rent bills, utilities; heating bills, electric bills, phone bills. Also cell phone bills, if you have any other form of bills that you can show you make payment monthly on.

Judgments:

A Judgment Must be Paid Completely and if still being reported on credit documentation must be provided proving the judgment is paid or settled.

Bankruptcy

Chapter 7:

With a Chapter 7 you must have a minimum of a 2 year lapsed period since the judgment. If your Bankruptcy was from a extenuating circumstance other than Divorce a 1 year lapse might be acceptable. Say if you have had a death in the family that had caused the bankruptcy; this would be a extenuating circumstance.

Chapter 13:

If you have been paying on the Chapter 13 for 1 year and making timely payments you would be permitted to apply for a FHA loan; provided you must receive approval from the court to enter into a mortgage transaction.

No bad credit after the bankruptcy, No collections, No judgments, No Exceptions!

Foreclosure:

The requirement is there must be a 3 year lapse since the completion of the foreclosure. The borrower must have established good credit since the foreclosure. However if this was the borrowers main residence and the foreclosure resulted due to a extenuating circumstance; Say if you have had a death in the family that had caused the foreclosure; this would be a extenuating circumstance. A exception maybe granted if you have established good credit since.

Collections:

You can not have more than $2,000. in collections. But if you are refinancing and have over $2,000. in collections this might be acceptable but only if the debt will be paid off at closing.

Mortgage Lates:

You can not have any late payments in the last 12 months; but some extenuating circumstances may apply.

Default or Delinquency on Federal Debt:

If you presently are delinquent on a Federal debt or have any type of Federal Lien, you would not be eligible for a FHA mortgage. Not until the delinquent account is paid, or brought current, or otherwise satisfied. If a satisfactory repayment plan has been made this must be verified in writing.

Ask Questions - Click Here