FHA loan qualifications 2016

New FHA policy requires a minimum credit of 500 to buy a house or refinance. FHA did not require any credit score before 2010.

Borrowers with credit score above 580 require a 3.5% down payment. The funds can be a gift from a family member and a 6% seller's concession is allowed.

If you have a credit score below 580, new FHA changes require a 10% down payment. The funds can be a gift from a family member and a 6% seller's concession is allowed.

Borrowers with credit score above 580 can refinance up to 96.75% loan-to-value with a rate and term refinance. Borrowers with credit score below 580 can refinance up to 90% loan-to-value with a rate and term refinance.

Borrowers with credit score above 580 can cash out up to 85% loan-to-value. Borrowers with credit score below 580 can cash out up to 75% loan-to-value.

Collection Accounts

There are no documentation or letter of explanation requirements for loans with collection accounts or judgments run through Fannie Mae that receive an Approve/Eligible despite the presence of collection accounts or judgments.

FHA does not require collection accounts to be paid off as a condition of mortgage approval
FHA requires judgments to be paid off before the mortgage loan is eligible for closing

An exception to the payoff of a court ordered judgment may be made if the borrower has an agreement with the creditor to make regular and timely payments.

Bankruptcy

At least 2 years must have elapsed since the discharge date of the borrower's Chapter 7.

Foreclosure

Foreclosure must have been resolved for at least 3 years with no late payments since the date of resolution.

Seasoning requirements are determined by the type of loan:

Government loan: Seasoning is determined by the date the claim was paid

Other than Government loan: Seasoning is determined by the date of sale the lender sold the property

Short sale

FHA guidelines requires 3 year past from the date of sale of the property.

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