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.
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 has changed the minimum credit score for new borrowers:
August 15, 2013 - 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.
Whether you're planing to refinance, buy your first home, lower your monthly payments, refinance an investment property, buy a second home, apply for an FHA loan, consolidate debt or get pre-approved for a mortgage you can apply online or call us 888.958.4228.
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Minimum credit score needed to buy a house or refinance
FHA announced a policy change to address risk and strengthen finances. FHA changed the minimum credit scores for new borrowers:
A collection is minor in nature usually does not need to be paid off as a condition for loan approval
Chapter 7 Bankruptcy at least two years must have elapsed since the discharge date
Foreclosure must have been resolved for at least 3 years
FHA guidelines requires three year past from the date of sale of the property
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