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FHA loan with student loan in collections

Member

FHA loan with student loan in collections

Without getting into specifics I have a quick question. I am aware that you cannot get a FHA loan with outstanding goverment loans...would that change if i immediatly paid off the student loan that is in collections?

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Frequent Contributor

Re: FHA loan with student loan in collections

Not an expert on the subject especially since my defaulted student loans were private however if they are paid off and have no balance I would not see why it would be an issue since that is similar to the "rehabilitation" program they have in place for defaulted student loans where you are then elligible for a new government loan.  It might come down to an issue that you have to write a LOX but I can't see it as a complete denial for FHA.

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
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Established Contributor

Re: FHA loan with student loan in collections

In short, I would say yes (I also have unpaid defaulted private student loans, but I've researched the defaulted student loan-mortgage approval thing a lot) The issue is that you cannot obtain one government backed loan (an FHA mortgage) if you have another unpaid, defaulted government-backed loan (government student loans). However, if pay off the student loan to a $0 balance, then you no longer have an outstanding debt to the government and you should be able to get the FHA loan.

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
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