FHA announced a set of policy changes to strengthen the FHA. The changes announced are the latest in a series of changes enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.
The FHA has taken the following step:
FHA CREDIT REQUIREMENTS
FHA credit requirements have changed. For purchase and refinance you will need a minimum of 580 credit score for 3.50% down payment or 97.75% rate and term refinance or 85.0% cash-out refinance. If your credit score is below 580 then a 10.0% down payment is required for a purchase and a maximum of 90% Loan-To-Value for a rate and term refinance.
The Federal Housing Administration insures FHA loans
and did not used to require a minimum credit score. The new FHA Policy
changes requires a minimum credit score of 580 for 3.5% down payment and
anyone purchasing with a score lower than 580 will require 10% down
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.
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.
COLLECTION, JUDGMENTS, 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.
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
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
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.
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.
FHA guidelines lets you qualify after three years from a short
sale. FHA guidelines requires three year past from the date of the short sale. If your mortgage payments were not late at the time of short sale you do not have to wait to qualify for an FHA loan.
FHA guidelines for short sale allows borrowers with a minimum credit score of 500 qualify for a FHA loan. After a short sale, above 580 credit score and three years past the sale date FHA allows only 3.5% down payment.
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What's the minimum credit score needed to buy a house or refinance in Florida?
FHA loans require a minimum 500 credit score to buy a house or refinance
VA loans require a minimum 500 credit score to buy a house or refinance
Fannie Mae loans require a minimum 620 credit score to buy a house or refinance
USDA loans require a minimum 580 credit score to buy a houseor refinance
HomePath loans require a minimum 620 credit score to buy a house
HARP loans require no minimum credit score torefinance
Freddie Mac loans require a minimum 620 credit score to buy a house or refinance
Want to know if you qualify for an FHA loan? Get pre-approved for an FHA loan online.
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