Shaye P asked:




Credit requirements for FHA Loan are comparatively less stringent as compared to

Conventional Mortgage Loan VA Mortgage Loan USDA Home Loan

The first thing to understand is that there is no specific score requirement specified by FHA. The loans are underwritten based on overall credit profile of a borrower. Most lenders use automated systems like Desktop Underwriter by Fannie Mae or Loan Prospector by Freddie Mac, along with investor specified credit score requirements, to determine eligibility. If the loan is auto approved by DU or LP and score requirements are met then other factors like lates (Not Mortgage Lates), collections, charge offs are accepted, relatively easily, by underwriters. Generally a prospective Buyer may not like to pay charge offs or old collections and this may be possible on an auto approval.

Judgments and Tax Liens

Judgments and Tax Liens are a different ball game since these affect title. A 12 month history from IRS may be accepted by certain lenders and prospective Buyers may not be asked to clear the entire outstanding tax Lien in one go. Judgments normally need to be paid.

Credit Scores 640 + or 620 +

Credit requirements required by majority FHA Home Loan Lenders has already been increased to 640 for the past few months now. The earlier score requirements were 620. There are some lenders who will finance borrowers with 620 + fico. There are no additional pricing hits for FICOs being below 640 and above 620.

Credit Scores Below 620

Few FHA Home Loan lenders will accept such borrowers, if they have NO NEW lates in the last 12 months. Any new collections or charge offs opened as a result of lates before the last 12 months are considered OK.

No Active TradeLines or No Scores

The same principle applies. Some FHA Home Loan lenders will accept such borrowers if they have NO NEW lates in the last 12 months. Any new collections or charge-offs opened as a result of lates before the last 12 months are considered OK only if Non Traditional credit can be established. Non Traditional Credit for 12 months can be documented in the form of Rent payments, Telephone/ Cell phone payments, Electricity, Water, Garbage, Cable, Storage or any other payments made consistently for the last 12 months. Generally a combination of 4 Traditional or Non traditional lines are required.

Prospective Home Buyers should read comprehensive Lending information on FHA Loans, VA Mortgage Loans, USDA Loans, Conventional Loans.

Access the PreQual affordability Mortgage Calculator

Doris

gabbi_gurl_2003 asked:


I am just wondering, we would like to purchase a house that has come up for sale in our neighborhood. I know that there have to be some type of programs out there because I know plenty of people with way worse credit scores that have been approved for mortgages.
I know that there are first time home buyer programs, but what if you cannot get approved for a loan? The programs that I have seen that help first time home buyers, require that the co-signer also live in the home, so it’s not like someone that we know could co-sign for us.
Any information that you can provide will be helpful, thank you in advance.
So the house we saw is $29,000. It needs work, but we are willing to do the work. We currently own a mobile home that we bought for cash, we have put work into it and could easily get $10,000 for it. We have money for a down payment, but this money should be used for repairs to the house that we would like to purchase. Could we get approved for more than the asking price, and use the extra money for repairs (providing that we put $10,000 down)?

Scott

Carrie Reeder asked:




When applying for a mortgage loan, your credit score plays a huge role. Thus, many people choose to establish a good credit history before applying for a mortgage. Having a low credit score will not necessarily prevent you from getting a mortgage. Likewise, it’s possible to get a mortgage with no credit history. Before applying for a no FICO score home loan, it is important to understand how these loans work, and how to qualify.

Purpose of Credit Scoring

Without credit reports and credit scoring, potential lenders would be unable to assess an applicant’s creditworthiness. Credit reports contain very detailed information about our credit history. For example, the length of credit history, number of credit accounts, outstanding balances, etc. Along with creditor information, reports also contain a three digit number. This is the FICO score. Credit scores range from 300 to 850. Higher scores obviously means better credit.

How Credit Scores Affect Mortgage Loan Approvals

Years ago, obtaining a mortgage loan with poor credit was rare. However, lenders have begun offering flexible programs, which make it possible for more families to qualify for home loans. Among these includes a variety of mortgage loans especially for people with bad credit.

Bad credit generally consists of several late payments, bankruptcies, foreclosures, collections, judgments, etc. All of these factors contribute to very low credit scores. Low credit scores equal higher interest rates, which will increase mortgage payments. Fortunately, there are loan programs in which FICO scores are not a primary factor.

What are No Credit Score Home Loans?

If you have bad credit or no credit history, you may qualify for a no credit score home loan. In many instances, homebuyers earn a sizeable income, in which they can afford to buy a home. However, because of past credit history, many will not qualify for a conventional home loan. Rather than wait until credit improves, these individuals may apply for loans without using credit scores.

Try using one of ABC Loan Guide’s
Recommended Poor Credit Mortgage Loan Companies.

Many mortgage lenders offer these sorts of loans. However, homebuyers must meet certain criteria. For example, most lenders will only finance 70% or 80% on a no credit score loan, thus the homebuyer must have a down payment of approximately 20% – 30%. Secondly, most lenders require full documentation on these loans. Thus, homebuyers needing a no doc or stated income loan may not qualify.

Angela