Cash Out 85 LTV 550 Credit Score FHA

Cash Out 85 LTV 550 Credit Score FHA


We hear it all the time!

What's the minimum credit score for an FHA cash out refinance loan?

The answer is.

The minimum credit score for an FHA loan is 500.

Cash out refinance

FHA refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe, therefore repaying their current mortgage and using the equity they have built up in their home to take out another larger mortgage.

FHA refinance allows cash out amount up to 85% of the value of the property with a minimum credit score of 550.

New borrowers with less than a 550 credit score maximum cash out 75% loan-to-value. 

Disputed Accounts - If the credit report reveals that the borrower is disputing any credit accounts or public records, the disputes must be resolved.

FHA will not allow you to close on a loan with disputed accounts unless the disputed account has a zero balance; is marked as "paid in full" or "resolved"; or has both a balance less than $500.00 and the date of the dispute is more than 24 months old.

Collection Accounts - FHA does not require you to pay off collection accounts. Medical collection accounts, auto repossessions, credit card collection account and any other collection account do not have to be paid off. The lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower’s debt-to-income ratio.

Foreclosure - To be eligible for a FHA loan 3 years must have past from the date the bank sold the property.

Seasoning requirements is determined by the type of loan:

  • Conventional loan: the date of sale the lender sold the property
  • Government loan: the date the claim was paid

A borrower whose previous residence or other real property was foreclosed on or has given a deed-in-lieu of foreclosure within the previous three years is generally not eligible.

Short Sale - To be eligible for a FHA loan 3 years must have past from the date of sale. If your mortgage payments were in default at the time of the short sale FHA requires you to wait 3 years before you can qualify for a new loan.


Cash out 85 LTV 550 credit score FHA

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Cash out 85 LTV 550 credit score FHA

FHA Minimum

Credit Score

Requirements


FHA announced a policy change to address risk and strengthen finances. FHA changed the minimum credit scores for new borrowers:

  • New borrowers will now be required to have a minimum credit score of 550 to qualify for FHA's 85% cash out program
  • New borrowers with less than a 550 credit score to qualify for FHA's 75% cash out program
  • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well
  • This changes went into effect in 2010

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