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Many questions about FHA home loans and FHA refinance loans that require a new credit check include some type of concern over a past credit mistake. Or an unforeseen situation that caused the borrower to miss payments.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Can a Single Financial Mistake Jeopardize My FHA Loan?

November 9, 2015

Many questions about FHA home loans and FHA refinance loans that require a new credit check include some type of concern over a past credit mistake. Or an unforeseen situation that caused the borrower to miss payments. Can such a one-time issue cause a lender to turn down a borrower’s FHA mortgage loan application?

It all depends on circumstances. If the credit issue is an old one, or hasn’t occurred in the 12 months leading up to the FHA loan or refinance loan application, the borrower is far more likely to have a lender willing to work with them than one who has had serious credit trouble in the year leading up to the loan.

It’s best to come to the FHA loan process with no fewer than 12 months of reliable payments on your credit history--something we have mentioned many times.

But FHA loan rules do allow a lender to exercise discretion where the borrower’s credit patterns indicate an otherwise responsible use of credit and on-time payments. The big picture financial data is very important in such cases, so borrowers who want to know if they are credit-worthy can begin by examining their own records to see what the lender will see when the credit reports are pulled.

Your loan officer’s job first and foremost is to insure that you, the borrower, are a good credit risk. A situation where medical bills caused financial hardship, or there was a layoff during bad economic times might not be enough to force the lender to say “no” to your credit application. But the borrower should know that the “one-time nature” of such issues are key.

Those with repeated credit problems may find it more difficult to get loan approval. In cases where you simply aren’t sure what may apply in your case, you can always get a referral to an FHA/HUD approved housing counselor who can assist with pre-purchase guidance and advice. Contact the FHA directly for such a referral by calling them at 1-800 CALL FHA.

Credit counseling can go a long way toward helping you determine if you are ready at the present time for an FHA mortgage loan application or if you need more preparation before you can fill out the paperwork.

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