Chances of obtaining a FHA Loan in 2009/2010

JShidell · ‎08-20-2008

Hello,

I was wondering what would be the possibility of me obtaining an FHA loan for about 250-300K sometime in late 2009 or early 2010. My credit is pretty bad right now and I'm in the process of fixing it up as much as I can before I purchase. I'm not pressed to buy anytime soon but I want to buy within the next year or so. Here is my current situations with my credit.

For one I have alot of charge-off and collection accounts on my credit report. I have about 6 charge-off accounts and about 8-10 collections. All of the charge-off accounts are reporting 0 balances and all of them are from 2004 except for one that was from last year.

I'm not sure how Loan Officers look at Charge-off accounts. Do they look at how recent or if there is a balance? Or do they also look to see if that charge-off has been paid off regardless if there is a 0 balance?

I heard FHA does not care to much about collection accounts if they are pretty old, how true is that?

I have not had any lates or missed payments in 3+ years because since my credit took a nose dive in 2004 I have only used cash, nothing credit wise.

That charge off from last year was due to some rental property for property repair. I had to suddenly move and I didn't have time to fix up or clean my apt to my land lords approval and they billed me for the damage. I didn't have the money to pay for all that damage repair at that time so the account went onto my credit report as a charge-off. I didnt' break a lease, and I was late maybe twice back in 2004, but was good on my rent up until I moved in 2007. How will this effect me?

I'm currently overseas and I don't plan on having any rent history for the next couple of years so i'm not sure if that will work to my advantage when applying for the FHA loan or not.

I will definitely have enough money for a deposit if need be, so I think thats a plus.

Also work history is definitely not a problem since i've held a job steadily since 2001 with no gaps even though I have switched jobs and companies once during my 8+ years.

My current credit scores are: TU (623), Eq (614), Ex (633), even though I heard FHA does not rely on FICO Scores. I'm hoping to raise my scores another 100 points before I apply for better rates.

I think my main concern is my charge-off accounts, because i've heard lenders will not even deal with you if you have charge-off accounts on your report.

Please let me know what my chances are with an FHA loan and if I should be concerned with my CO accounts? Of course I know I have to maintain good credit from here on out as well.

I plan to purchase in Texas.

Thank you for your time.

v/r

JShidell

Anonymous · ‎08-20-2008

Hi J

I think your chances are excellent- FHA is not credit score based. Are any of your charge offs very large - say over 1k? if so that could be an issue. But over all I'd say you were on the right track.

Be sure to keep your score clean between now and then and remember FHA

likes to see at least 3 trades lines and they should be at least 12 months old if possible.

Feel free to email me if you need any more info -

Anonymous · ‎08-20-2008

One more thing

FHA has max loan limits in certain areas- You need to check the Max limit for your area

Let me know if you need a link

JShidell · ‎08-20-2008

@Anonymous wrote:
Hi J
I think your chances are excellent- FHA is not credit score based. Are any of your charge offs very large - say over 1k? if so that could be an issue. But over all I'd say you were on the right track.
Be sure to keep your score clean between now and then and remember FHA
likes to see at least 3 trades lines and they should be at least 12 months old if possible.
Feel free to email me if you need any more info -

Alabama1,

Thank you for your reply. I do however have some charge-off accounts on my reports that are 1k+. One being a car repo back in 2004, however I paid that off.

I was unaware of the 3 trade line requirement, that can definitely be a problem being I only have 1 right now that is open. I do have a car loan and about 4 signature loans that are positive trade lines but are closed accounts.

If you can supply me with a link that would be awesome. I'm looking to purchase a home in the Northwest side of San Antonio, Texas

Thank you!

v/r
JShidell

GFer · ‎08-20-2008

You should really check out the rebuilding forum and the others about fico scores!

Since you aren't looking to purchase now, you have plenty of time to acquire some new tradelines and build those scores!!!

EQ 817, EX 815, TU 813 (Updated 1/5/18: TU 843

Take the myFICO Fitness Challenge

JShidell · ‎08-20-2008

GFer wrote:
You should really check out the rebuilding forum and the others about fico scores!
Since you aren't looking to purchase now, you have plenty of time to acquire some new tradelines and build those scores!!!

GFer,

I have been living on the rebuilding forums for many months now. However I was interested in getting an FHA loan in the future that is why I came to this forum. I don't see anything wrong with asking and preparing before hand. I was unaware of certain things regarding FHA so I asked. I'm not overly concerned with FICO scores since FHA don't use them however I know higher FICO scores can help with better interest rates.

Thanks,

v/r
JShidell

Anonymous · ‎08-21-2008

You should be OK. The one that would concern me was the more recent charge off for two reasons. First it is more recent. Second, it relates to rental history. Your expalnantion that it you had to move quick and couldn't pay the damages may not play well if the file goes to manual underwriting. It might be no problem, but it shows a lack of stability which is a key factor in underwriting approval. Rental and Job history can be key once it gets to manual. With a bunch of past charge offs, they may place alot of weight on the more recent one since FHA general rule is no baddies in 12months and explanations for any in the past 24. The only way to find out is apply.

Also, I would contact the most recent charge off and ask for a pay for delete if youhave the money to pay it in full.

DallasLoanGuy · ‎08-21-2008

JShidell wrote:
Hello,

I was wondering what would be the possibility of me obtaining an FHA loan for about 250-300K fha limits are $271,050 across the state. i dont think we have any counties with a higher limit. but i could look it up for you. sometime in late 2009 or early 2010. My credit is pretty bad right now and I'm in the process of fixing it up as much as I can before I purchase. I'm not pressed to buy anytime soon but I want to buy within the next year or so. Here is my current situations with my credit.

For one I have alot of charge-off and collection accounts on my credit report. I have about 6 charge-off accounts and about 8-10 collections. All of the charge-off accounts are reporting 0 balances and all of them are from 2004 except for one that was from last year.

I'm not sure how Loan Officers look at Charge-off accounts. Do they look at how recent or if there is a balance? Or do they also look to see if that charge-off has been paid off regardless if there is a 0 balance? we look at all of the above. but is they are old, they typically hurt very little. especially if you have a lot of good accounts that are current

I heard FHA does not care to much about collection accounts if they are pretty old, how true is that? fha doesnt require colletions/chargeoffs to be paid. some lenders do, so if your loan officer says pay..... find a new loan officer

I have not had any lates or missed payments in 3+ years because since my credit took a nose dive in 2004 I have only used cash, nothing credit wise. you need to establish some good credit.

That charge off from last year was due to some rental property for property repair. I had to suddenly move and I didn't have time to fix up or clean my apt to my land lords approval and they billed me for the damage. I didn't have the money to pay for all that damage repair at that time so the account went onto my credit report as a charge-off. I didnt' break a lease, and I was late maybe twice back in 2004, but was good on my rent up until I moved in 2007. How will this effect me? should be fine.

I'm currently overseas and I don't plan on having any rent history for the next couple of years so i'm not sure if that will work to my advantage when applying for the FHA loan or not. rent history not required if you get approved thru automated underwriting. you need to establish some good credit(even secured visa) to ensure an automated approval

I will definitely have enough money for a deposit if need be, so I think thats a plus.

Also work history is definitely not a problem since i've held a job steadily since 2001 with no gaps even though I have switched jobs and companies once during my 8+ years.

My current credit scores are: TU (623), Eq (614), Ex (633), even though I heard FHA does not rely on FICO Scores. I'm hoping to raise my scores another 100 points before I apply for better rates.

I think my main concern is my charge-off accounts, because i've heard lenders will not even deal with you if you have charge-off accounts on your report. not true. some are more picky, but we close loans daily with collections

Please let me know what my chances are with an FHA loan and if I should be concerned with my CO accounts? Of course I know I have to maintain good credit from here on out as well.

I plan to purchase in Texas. The 'Great State'

Thank you for your time.

v/r
JShidell

Retired Lender

JShidell · ‎08-21-2008

mickie08 wrote:
You should be OK. The one that would concern me was the more recent charge off for two reasons. First it is more recent. Second, it relates to rental history. Your expalnantion that it you had to move quick and couldn't pay the damages may not play well if the file goes to manual underwriting. It might be no problem, but it shows a lack of stability which is a key factor in underwriting approval. Rental and Job history can be key once it gets to manual. With a bunch of past charge offs, they may place alot of weight on the more recent one since FHA general rule is no baddies in 12months and explanations for any in the past 24. The only way to find out is apply.

Also, I would contact the most recent charge off and ask for a pay for delete if youhave the money to pay it in full.

Well I do have some leverage I hope to help back up the reason for the charge-off. Being that I did have to move quickly due to a job and me having to leave the country to Iraq. I did not receive my bill from my land lord until I was already in Iraq, that was how quickly the move was.

I already tried to contact the landlord to see if I can pay but I have not heard back from them. Its hard to communicate while being out here in Iraq.

I will be on r&r next month so i'm hoping I can deal with them face to face when I get there to help resolve this.

Thanks for your help.

v/r
JShidell

DallasLoanGuy · ‎08-22-2008

JShidell wrote:

mickie08 wrote:
You should be OK. The one that would concern me was the more recent charge off for two reasons. First it is more recent. Second, it relates to rental history. Your expalnantion that it you had to move quick and couldn't pay the damages may not play well if the file goes to manual underwriting. It might be no problem, but it shows a lack of stability which is a key factor in underwriting approval. Rental and Job history can be key once it gets to manual. With a bunch of past charge offs, they may place alot of weight on the more recent one since FHA general rule is no baddies in 12months and explanations for any in the past 24. The only way to find out is apply.

Also, I would contact the most recent charge off and ask for a pay for delete if youhave the money to pay it in full.

Well I do have some leverage I hope to help back up the reason for the charge-off. Being that I did have to move quickly due to a job and me having to leave the country to Iraq. I did not receive my bill from my land lord until I was already in Iraq, that was how quickly the move was.

I already tried to contact the landlord to see if I can pay but I have not heard back from them. Its hard to communicate while being out here in Iraq.

I will be on r&r next month so i'm hoping I can deal with them face to face when I get there to help resolve this.

Thanks for your help.

v/r
JShidell

dont do anything with it until you have had a loan officer look at it. you cannot get approved in a discussion forum.... and you could do more harm than good by saddressing the derogatories.

Retired Lender