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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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May 23, 2019
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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

FHA Loan Rules for Borrowers After Filing Bankruptcy

May 20, 2019 - In a tough economy borrowers worry about bankruptcy, foreclosure, and the effects such issues can have on the ability to borrow. So, what is the required waiting period for new FHA home loans after filing bankruptcy or foreclosure?

FHA One-Time Close Construction Mortgages and Credit Issues

May 14, 2019 - Borrowers who want to apply for an FHA One-Time Close construction loan may, depending on the lender and circumstances, find that certain credit issues must be satisfactorily addressed as a condition of loan approval.

Can I Finance a Tiny Home With an FHA Mortgage?

May 12, 2019 - Any property, tiny or not, that is not on a permanent foundation or will not be affixed to a permanent foundation as a condition of the loan will never be approved for an FHA mortgage loan. The reason for this is simple; if your home is on wheels, it cannot be classified as real estate.

FHA Cash-Out Refinance Loan Tips

May 11, 2019 - FHA cash-out refinance loans do require an appraisal, and borrowers who live in housing markets that are on the rise should check to see how far property values have increased since the last appraisal.

How to Help Yourself Get a Home Loan

May 10, 2019 - First-time borrowers may wonder what steps they can take in the months leading up to a loan application that will help them get closer to loan approval. What does it take to get a lender to approve your mortgage loan application and put you on the road to owning your first real estate?

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!