FHA Loan No Credit Score

The FHA loan program allows for no credit score. The lender must conduct a manual underwriting review according to FHA requirements and must determine if the borrower is creditworthy in accordance with FHA standard credit policies and requirements.

FHA allows non traditional credit to be used for borrowers who do not have the type of trade references on a traditional credit report. In addition, FHA allows the use of non traditional trades to supplement a traditional credit report that has insufficient trades.

Today’s historically low interest rates make now the perfect time to purchase a new home or refinance.

One of the most popular types of mortgages is the 30-year fixed-rate mortgage. This loan is usually the easiest to qualify for and provides the maximum interest deduction at tax time. The interest rate stays the same over the life of the loan which provides unchanging low monthly payments.

To be approved at the lowest mortgage rates, borrowers do not need to have the highest credit score. In addition, the consumers need a reasonable debt-to-income ratio. Most lenders will qualify borrowers at a maximum of 50 percent of overall debt to household gross monthly income. Some borrowers with significant assets or income will be able to qualify even with slightly lower credit scores or higher debt.

Low mortgage rates result in lower monthly payments which can save you thousands of dollars off the life of the loan.

When using non traditional credit to demonstrate the borrower has sufficient credit references and an acceptable payment history, FHA requires a minimum of three credit references rated for a minimum of 12 months.

Acceptable trade line references are:

• Rental housing payments
• Utility company (gas & electric)
  
• Car insurance
  
• Cell phone
  
• Cable TV

FHA will evaluate the trades for no history of late pays on housing, no more than 1x30 late pays on the utilities and no collections (except minor medical), charge-offs, or public records filed in the last 12 months.

If the borrower rents from a family member, 12 months cancelled rent checks are required to demonstrate the amount and regularity of payment.

Collection Accounts

FHA does not allow no credit score to offset derogatory/adverse traditional credit trades, manufacture a credit report for a borrower without a credit history, or enhance a credit history of a borrower with a poor payment record.

Federal debt

If the borrower is presently delinquent on any federal debt as revealed by public records, credit information or HUD’s CAIVRS System the borrower generally is not eligible for an FHA loan.

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FHA loan no credit score 2016

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