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FHA requirements are structured so that loan applicants who have a good credit history will likely be eligible for the mortgage. Late payments, bankruptcies, no credit history, and foreclosures will adversely affect your chances.

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July 15, 2019
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FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA Requirements

Credit Guidelines That FHA Lenders Follow

Before approving a loan, the lender analyzes the integrity of the borrower's past credit performance. Based on FHA requirements, those who have a good credit history demonstrated by a solid track record of timely payments will likely be eligible for a loan. Potential borrowers whose credit history is marred by slow payments, poor financial judgment and delinquent accounts is not a good candidate for loan approval.

Credit Guidelines That FHA Lenders Follow

The following is a list of items concerning the borrower's credit:

No Credit History

Two lines of credit are necessary to apply for an FHA loan. However, in the event a borrower does not have sufficient credit on their credit report the FHA will allow substitute forms.

Chapter 13 Bankruptcy

FHA will consider approving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee's written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.

Chapter 7 Bankruptcy

At least two years must have elapsed since the discharge date of the borrower and / or spouse's Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.

Late Payments

During an underwriter analysis of borrower credit, the overall pattern of credit behavior is being reviewed rather than isolated cases of slow payments. If a good payment pattern has been maintained, regardless of a specific period of financial difficulty preceded it, the borrower may escape disqualification.

Foreclosure

FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower's main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit. This does not include the inability to sell a home when transferring from one area to another.

Collections, Judgments, and Federal Debts

A collection is minor in nature usually does not need to be paid off as a condition for loan approval. It is stated as such in FHA guidelines. Any judgments will have to be paid in full prior to closing. Borrowers who are delinquent on any federal debt, such as tax liens, student loans, etc., are not eligible.

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FHA Loan Articles and Mortgage News

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July 5, 2019 - An FHA forward mortgage allows the borrower to apply for funds to purchase the home, with options to finance the Up-Front Mortgage Insurance Premium and certain approved, appraiser-required corrections where applicable.

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Fixing Credit Report Problems Ahead of Your FHA Home Loan

July 2, 2019 - If you are planning to apply for an FHA home loan or any other type of mortgage, you will need to review your credit report long before you start filling out loan paperwork. One of the most important reasons to start early is to check for errors or evidence of identity theft.

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June 29, 2019 - The appraisal is a process that the lender initiates. The lender pays an FHA fee appraiser to review the home to determine the fair market value taking into consideration the condition of the home itself and how it matches up other, similar properties in the housing market.

Qualifying Income for an FHA Mortgage Loan

June 28, 2019 - Not all of your income may be eligible to be counted toward your debt-to-income ratio. The lender is required to insure that any income that is used will be likely to continue, and is also stable. Stability and reliability of income means some kinds of earnings won’t count.

FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!