FHA question

[damnedanddetermined]

With an FHA mortgage....does CO or Collections matter in the approval? I have heard it goes both ways. What are the new FHA guidelines for 2015??

[Anonymous]

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@damnedanddetermined wrote:

With an FHA mortgage....does CO or Collections matter in the approval? I have heard it goes both ways. What are the new FHA guidelines for 2015??

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FHA does not require collections to be paid. If total sum of all collection accounts are $2000 or more, 5% must be counted towards DTI (if there is no repayment plan).

[damnedanddetermined]

dpeezy, does it mater if collections are 5-6 years old?  and do both spouses have to be on an FHA loan? My wife doesnt work and I have only worked on my credit (which was a job in itself) to get qualification. Thanks for all the info

[Anonymous]

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@damnedanddetermined wrote:

dpeezy, does it mater if collections are 5-6 years old?  and do both spouses have to be on an FHA loan? My wife doesnt work and I have only worked on my credit (which was a job in itself) to get qualification. Thanks for all the info

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Nope, age of collection doesn't matter... except for the further in the past, the less it will negatively impact your score.

You both need to be on the loan, but both spouse's debt must be factored into the DTI ratio if you live in a community property state.

[damnedanddetermined]

ok, so both need to be on the loan....we are not in a community property state, so I dont need to worry about my  wifes collections, etc?? What about her score? I hope Im helping others by my insane questions :/  Thanks Peezy!!

[Anonymous]

In my experience from reading these forums and just obtainaing an FHA loan, medical collections are ok and anything else is up to the underwritier.  I think if you get the pre-approval with what you have there is a possibility that underwriting may make you pay something off before closing but then again he may not say anything about it.  Depends on what it is, how much it is and whether or not there is possibility of a lien being placed on the property.  Hope this helps.

[Anonymous]

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@damnedanddetermined wrote:

ok, so both need to be on the loan....we are not in a community property state, so I dont need to worry about my  wifes collections, etc?? What about her score? I hope Im helping others by my insane questions :/  Thanks Peezy!!

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No, she does not have to be on the loan. You can have one on the loan, but in a community property state the other spouse's debts still need to be factored in the DTI ratio.

I wouldn't say you don't need to worry about them, but they are not a guaranteed dealbreaker off the bat. It depends on what your LO thinks, AUS approval, and underwriter discretion. Your LO will be able to give you the best advice on your particular scenario.

[damnedanddetermined]

Peezy...Im confused :/   Wifey does NOT have to be on loan, we are NOT a community property state, but HER credit will be looked at?!!?  Why would her credit matter if not on the loan? I dont understand that part...

[Lemmus]

...just to add a bit to what's been said ...the FHA requirements are the minimum standards ...but the lender could well have their own overlays (higher standards) that may require you pay some or all of the CAs ...it varies widely and is a good reason to shop your loan to other lenders if your current lender requires you pay them and you can't/won't

...and note that paying them won't improve your scores ...Fico doesn't differentiate between paid/unpaid CAs ...hth

[Anonymous]

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@damnedanddetermined wrote:

Peezy...Im confused :/   Wifey does NOT have to be on loan, we are NOT a community property state, but HER credit will be looked at?!!?  Why would her credit matter if not on the loan? I dont understand that part...

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In a non-community property state, her credit/debt will not be looked at if she's not on the loan.