Do you have a disputed account on your credit report (such as a debt collection item) that equals more than $1,000? If so, it could hurt your chances of qualifying for an FHA home loan. The Department of Housing and Urban Development recently modified a rule that could put government-backed financing out of reach for many would-be home buyers.
What does it take to qualify for an FHA home loan today? What sorts of guidelines do lenders use when approving borrowers for this program? We posed this question to two-dozen lenders across the United States. Here is what they told us. This story is a must read for anyone who is planning to use a government-backed mortgage to buy a house.
The FHA mortgage financing program has long been the alternative for borrowers who cannot qualify for a conventional loan. People with shaky credit, small down payments, and high debt levels often turn to this program. But they don’t accept just anyone. There are certain standards in place, including credit scores.
New rumors have suggested the government is preparing to raise down-payment requirements for FHA loans. The current minimum is 3.5% of the loan amount. Some have said it will soon go up to 5%. We spoke to officials with the Department of Housing and Urban Development (HUD), and they said they have no plans to make such a change.
In the past, you probably would’ve needed a FICO credit score of 600 or higher to get an FHA loan through Wells Fargo. But that may change in the near future. The New York Times reported that the nation’s largest mortgage lender is lowering their minimum score to 500, for certain borrowers at least.
The FHA is raising their mortgage insurance premiums, and it seems to be causing a lot of confusion among consumers (if our readers are any indication). There’s a lot to be confused about, actually. This isn’t the first time they’ve raised the premium, and there are two different types. This story explains the latest change in simple terms.
The FHA loan program is one of the most popular financing tools for first-time buyers. It allows for a smaller down payment than a conventional home loan, as low as 3.5% of the amount borrowed. But there are certain qualification criteria you should know about, if you play to apply for this program. Here they are in a nutshell.
During the housing boom, FHA loans only accounted for about 5% of total mortgage activity. But in the wake of the housing crisis, the market share rose to nearly 40%. Why? Because lenders tightened their standards for conventional mortgages, as a result of losses incurred during the crisis. We expect this trend to continue into 2011.
When you apply for an FHA loan, the lender will check your credit score to see how you have borrowed (and repaid) money in the past. A higher score increases your chances of getting approved, while a lower score increases the likelihood of denial. Recently, two of the biggest lenders in the country raised their credit-score requirements for government-backed mortgages.
We have previously written about some new credit score requirements for FHA home loans. These changes went into effect yesterday, October 4. Here is a summary of what has changed. In order to be eligible for an FHA home loan, borrowers must have a FICO credit score of 500 or above. Borrowers with credit scores […]