Licensed in the State of Florida

Licensed in the State of New Jersey


Charge off accounts

Charge off accounts


A charged off accounts is a debt that has become seriously delinquent and the lender has given up on being paid. FHA does not require charge off accounts to be paid but does require 5% of the debt to be included in your debt-to-income ratio. If you have a charge off on your credit report you do not have to do anything to qualify for an FHA loan approval.

FHA Back to Work Program

New borrowers may also be eligible for an FHA insured loan on a purchase transaction after 12 months from the completion, discharge, trustee's sale if the borrower meets the requirements for extenuating circumstances Economic Event.

Borrowers with a prior bankruptcy, foreclosure, deed-in-lieu, or short sale may be eligible for an FHA insured loan if the bankruptcy, foreclosure, deed-in-lieu, short sale was the result of a documented extenuating circumstance.

Credit score

FHA has changed the minimum credit score for new borrowers:

  • FHA requirements new borrowers will now be required to have a minimum credit score of 580 to qualify for 3.5% down payment
  • FHA loan requirements new borrowers with less than a 580 credit score will be required to put down at least 10%
  • This has allowed the FHA to better balance its risk and continue to provide financing for home buyers
  • HUD homes for sale in Florida

Collection accounts

FHA does not require collection-accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower’s ability to repay the mortgage.

  • If evidence of a payment arrangement is not available, 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.

Do medical collections need to be paid for an FHA loan?

No. Medical collections do not need to be paid for an FHA loan approval. FHA does not take medical collections into consideration. FHA does not require medical collection accounts to be paid off as a condition of mortgage approval and does not include them in the borrower’s debt-to-income ratio.

Mortgage World Home Loans of New Jersey is a licensed residential mortgage broker and will match you with the lender that will approve your FHA loan down to a 500 credit score.


FHA and charge off accounts

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FHA credit requirements - Loan-to-value - Loan limits - Debt-to-income


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Minimum credit score needed to buy a house or refinance


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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 580 to qualify for FHA's 3.5% down payment program
  • New borrowers with less than a 580 credit score will be required to put down at least 10%

Collection accounts

A collection is minor in nature usually does not need to be paid off as a condition for loan approval


Bankruptcy

Chapter 7 Bankruptcy at least two years must have elapsed since the discharge date


Foreclosure

Foreclosure must have been resolved for at least 3 years 


Short Sale

FHA guidelines requires three year past from the date of sale of the property


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