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Valued Member
rinkgirl2
Posts: 31
Registered: ‎05-14-2012

Would I qualify for FHA?

[ Edited ]

My husband and I would like to buy a house late this year or early next year, but it seems like there are a lot of things on your credit report that the underwriters have issues with.  I am currently working on getting our cc's paid below 9% so that will help increase our score enough that we hope to qualify.  I am just wondering if I will have any issues with anything listed on the actual report.  Here is what we have:

 

Chapter 7 Bankruptcy in July 2010 (we know it must be two years out before qualifying)

Paid State Tax Lien of $425 in 2011

Judgement that was filed before fiing bankruptcy, but debt was included in bankruptcy $6,359

 

Two Medical collections for $135 and $465 that are paid (trying to get the $135 as PFD, but if they won't I'll just pay it)

Timeshare sent to collection $6,913, making payments monthly since 02/12

 

3 credit cards for me

2 credit cards for him

2 vehicle payments

Student loans

No late payments or any other issues with any open accounts. 

 

We have quite a few accounts showing lates in the past, but all were included in BK. 

 

I appreciate any help as we are trying to clean up what we can.  Thanks!

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Would I qualify for FHA?

[ Edited ]
I would say other than that timeshare debt you have a good chance.. -- FHA guidelines 2012 starting in April 2012 FHA has changed it's collection account guidelines. Going forward all collection accounts within the last two years must be paid off. All collection accounts totaling over $1,000.00 must be paid off. Collection accounts that total less than $1,000.00 and are over two years old may not have to be paid off. FHA guidelines allows a borrower with a credit score of 580 to buy a home with only a 3.5% down payment. FHA guidelines allows a borrower with a minimum credit score of 580 to buy a home using their own funds for a down payment or the down payment funds can be a gift from a family member. FHA guidelines allows a home buyer with a minimum credit score of 580 up to a 6% seller's concession. The seller's concession must be written into the sales contract. 2012 FHA guidelines requires a minimum credit score of 530 for all loans. Home buyers with a credit score below 580 are required to make a 10% down payment. The down payment funds must belong to the borrower. No gift funds are allowed and no seller's concessions are allowed. New FHA Guidelines Home owners with a credit score above 580 can refinance up to a 97.75% loan-to-value. FHA guidelines allows up to 85% loan-to-value for a cash out refinance. Closing cost can be rolled into the new loan amount. Home owners with a credit scores below 580 new FHA changes require a maximum loan-to-value of 90% for a rate and term refinance. And up to 75% cash out refinance with credit scores below 580. Whether you're planing to buy your first home, refinance, lower your monthly payments, buy a second home, consolidate debt or get pre-approved for a mortgage. A perfect credit score is not needed for an FHA loan approval. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a for a conventional loan. Credit scores down to 530 are accepted if there are compensating factors that offset the credit risk.
Valued Member
rinkgirl2
Posts: 31
Registered: ‎05-14-2012

Re: Would I qualify for FHA?

Thanks...I thought, from what I read, that the new guidelines state that any collection accounts over $1,000 must be PIF or on a verifiable payment plan?  Can anyone confirm that?

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Would I qualify for FHA?

I have heard mixed reviews on the "payment plan". I will see what I can dig up
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Would I qualify for FHA?

[ Edited ]

Here you go.. you should be fine as long as you have made three or more payments.

 

According to FHA mortgagee letter 2012-3, there are important revisions to the instructions for FHA lenders found in HUD 4155.1 .4C.2.E. which formerly stated: “FHA does not require that collection accounts be paid off as a condition of mortgage approval. However, court-ordered judgments must be paid off before the mortgage loan is eligible for FHA insurance endorsement.”

 

Potential FHA loan borrowers who have outstanding debts sent to a collection agency are directly affected by recent changes in that old rule. The new guidance is as follows: “If the total outstanding balance of all collection accounts is equal to or greater than $1,000 the borrower must resolve the accounts (e.g. entered into payment arrangements with minimum three months verified payments- paid as agreed) or paid in full at the time of, or prior to closing.”

Valued Member
rinkgirl2
Posts: 31
Registered: ‎05-14-2012

Re: Would I qualify for FHA?

Wonderful - thank you!  I was hoping other than bringing our score up a little by paying our CC's down, there wouldn't be too much we would need to try and clear up. 

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Would I qualify for FHA?

No prob.. paying down cards will def help. Still to your guns on the PFD.. surely they would rather get something than nothing for deletion. Good luck.

Valued Member
rinkgirl2
Posts: 31
Registered: ‎05-14-2012

Re: Would I qualify for FHA?

One last question about FHA qualifications...I know they require at least two years on the job.  I will have been at my job for over 6 years by the time we're ready to buy, but my husband will only have been at his job for about 8-10 months and had two other jobs previous to that.  So by the time we're ready to buy he'll have had 3 different jobs in 2 years.  They are all in the same industry, but he was laid off of his last one and is now only working part-time so his pay is less.  Even with my good job stability (I also earn 3.5 times what he does), will his job instability keep us from qualifying?  Just hate to get my hopes up thinking we're okay on credit and then have that hit us.  TIA! 

Frequent Contributor
Catacam
Posts: 491
Registered: ‎02-06-2012

Re: Would I qualify for FHA?

You will be fine! Especially if it is in the same industry!

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Established Member
datzme4ya
Posts: 35
Registered: ‎08-30-2011

Re: Would I qualify for FHA?

I agree .. You should be fine. The biggest thing in your favor is it is in the same industry. My husband had the same thing, but luckily by the time we applied for our loan he had just hit his 2 year mark with the same company :smileyhappy:


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