FHA first time home buyer 2013. FHA minimum credit score is 530. New FHA policy requires a minimum credit of 530 to buy a home. In the old days FHA did not require any credit score. These changes went in to effect in 2010.
To buy a home you will need a minimum credit score of 530.
If you have credit scores below 580 new FHA changes require a 10% down payment. All funds can be the borrower's own funds or gifts are allowed. Up to a 6% seller concession is allowed. Often, 12 months of verifiable rental history is required for credit score below 640. If no verifiable rental history 3 months reserves will be required.
FHA on April 2012 changed it's collection account guidelines. Going forward all collection accounts within the last two years must be paid off. All collection accounts totaling over $1,000.00 must be paid off. Collection accounts that total less than $1,000.00 and are over two years old may not have to be paid off.
If you have collection accounts that are not paid off - FHA allows you to set up a payment arrangement to qualify. By setting up a payment arrangement FHA will allow you to make three on time monthly payments to qualify for a FHA loan.
FHA allows up to a 6% seller concession to purchase a home. So, if you want to buy a home for a $100,000.00 FHA will allow the seller to pay up to $6,000.00 for your closing cost (APR 5.98%). The seller must agree to a seller concession and in the above case you are allowed a seller concession of up to $6,000.00 for closing cost.
Your closing cost can then be rolled into your new loan.
FHA requires a 3.5% down payment. The down payment can be a gift from a family member or your own funds. So, in the above example the only down payment funds you will need to buy a $100,000.00 home is $3,500.00.
Seller concession must be added to the sales contract.
When you find a property you want to make an offer on you must include the seller concession in the sales contract. You can write it in two ways as a dollar amount (seller will pay up to $6,000.00 for closing cost) or you can write it in a percentage amount (seller will pay up to 6% of the purchase price for closing cost).
The above example requires a minimum credit score of 580.
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