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Medical Debt and FHA??

New Contributor

Medical Debt and FHA??

I want to try and get my 1st home in June 2008. I have no lates payments in 16 months, but I do have 2 hosipital bills from 2006 that was just added to my credit report in Sept 2007. The credit report show date open as Sept 2007, although the bill was generated in 2006. The two bills are $473 and $22.
 
Will this ruin my chances of FHA? I mean, I have been doing good with paying my student loan and credit card bill on time. Can the hospital bills effect chnaces of FHA? Will I have to wait another year?
 
Thank you all and I appreciate your help.
Message 1 of 6
5 REPLIES
Valued Contributor

Re: Medical Debt and FHA??

Pay them off before you apply. I do believe FHA requires a person to pay any outstanding collection accounts before they will fund the loan.

I have to assume lenders are more lenient with medical collections because it is very easy for a bill to get lost along the way and a collection agency to show up trying to get payment.
Mortgage Lenders Mid-Score 778 I AM A HOMEOWNER!!!!! 30 Year 5% Fixed Rate, closed on 3/18/09
Message 2 of 6
Regular Contributor

Re: Medical Debt and FHA??

FHA does not require outstanding collection accounts to be paid off (I just was approved through automated underwriting, and both me and the wife have collection accounts on our reports).  The exceptions are any federal delinquencies (tax liens, delinquent federal student loans) and judgements, which must be satisfied. 
 
Some of the lenders who provide the financing for the FHA loans will have stricter guidelines than the FHA mandates - many (but not all) will require non-medical collections to be paid off (mine didn't).  From what I've heard, few, if any, lenders will require medical collections to be paid.
 
The age of the accounts is important though - they don't want to see any collections within the past two years, and no lates in the past year IIRC.  Don't know whether they'd have a problem with recent medical collections.
Message 3 of 6
Super Contributor

Re: Medical Debt and FHA??

Don't mess with them until after you get a mortgage.
The lender will be able to tell how old they are.
As said above, if your lender says pay: Find another lender.
12+ months old is usually ok.
 
Retired Lender
Message 4 of 6
New Contributor

Re: Medical Debt and FHA??

Thank you for repyling. I live in Texas as well. I have only 2 medical bills on the credit report.
 
 
Message 5 of 6
Super Contributor

Re: Medical Debt and FHA??

LOTS of people have one or two. And usually do not know about them.
Texas Attorney General is on these collection practices.
They are hurting people's credit without trying to collect.
 
Retired Lender
Message 6 of 6