topic Re: Confused about FHA Loans... in Mortgage Loans

Confused about FHA Loans...

Anonymous — Wed, 24 Dec 2008 05:05:09 GMT

I was reading many posts and I am confused on FHA loans. What are the qualifications to apply for a FHA loan? I also, noticed that many posts said that FHA lenders don't look at FICO scores....is that true? What do they look at? So FHA is one type of loan...what are others? I just want to make sure I understand all the loan types that are out there and which ones would be better for me...any help would be appreciated! Thanks in advance!

Re: Confused about FHA Loans...

Anonymous — Wed, 24 Dec 2008 15:45:17 GMT

FHA loans are not dependent on FICO scores, however the lender funding them will, in most cases, have a minimum score they will accept in order to fund the loan. So while it is not a qualification per FHA guidelines, it will be a qualification per Lender guidelines.

I am not an expert at all, but I have to say FHA seems to be the best route to go for people with spotty credit history or low downpayment. Even then a lot of the lenders I talked to required a min. 620 mid score to even consider approving me.

In addition there are also USDA loans available in what are considered "rural development" areas, which are decent in the fact they are the only loans I know of that will fund 100% of the sale price. Also VA loans available to veterans. Then you have your conventional loans which will vary from institution to institution based on factors such as credit score, amount of downpayment, etc.

I am sure there are some other options out there, but I am sure the experts will chime in with those I missed.

Re: Confused about FHA Loans...

Anonymous — Wed, 24 Dec 2008 16:53:53 GMT

Just to add I think the prevailing minimum mid score the lenders are requiring for FHA is 580. Some are requiring 620 but most are still 580 I think. From what I understand once you hit 620 you get the best FHA rates available. I just refinanced with a 617 mid score and a 95% LTV and still think I did pretty well at 5.5%.

Re: Confused about FHA Loans...

Anonymous — Wed, 24 Dec 2008 17:27:36 GMT

Thank you so much for your help! I understand better now...looks like I have a decision to make on what loan would work better for me!

Re: Confused about FHA Loans...

Anonymous — Wed, 24 Dec 2008 18:31:31 GMT

Hi Swtrandi,

I can confirm the previous posts re FHA scores and rates.

We're in the market right now as well.

580 FICO for FHA gets you in the door; 620 FICO or better

qualifies you for the best rates (in our area that's 5.25%)

620 or better is required for the USDA Guaranteed Loan

Program, where a local lender makes the loan and the USDA

guarantees it. Rates in our area range from 5.375 - 5.99% .

The higher your FICO score, the lower the rate you qualify for.

USDA also offers a Direct Loan Program. The funding for this

loan comes directly from the USDA, and this program is for

low and very low income applicants. Rates are as low as 1%.

I'm also VA qualified. The best rate we've found is 5.25% for

30-year fixed with 0 points.

Both VA and USDA are 100% financing. FHA is 97% financing.

Hope this helps you. Good luck in your search!!!!

CanDo

"The right attitude is everything"

Re: Confused about FHA Loans...

Anonymous — Thu, 25 Dec 2008 08:26:09 GMT

Thank you so much!!

Re: Confused about FHA Loans...

bsal — Thu, 25 Dec 2008 23:17:21 GMT

Well here is my question i been reading this post and i found it intresting, here is my back round I have a 660 transunion fico score but that should be more points cause i jus got some stuff removed, i have a 717 eqifax score and a 700 ex score, I have no car loan, no baddies no collections I have one installment school loan witch is about almost paid off with a balance of 1,400.00 left and one mayc's store department card store all paid on time; my question is i'm mostly going to be a frist time home buy what do you think are the rates i would get with my current situation and what is a good down payment for a house with joining these fha programs? if it will help i'm in the MD,DC,VA area thanks

Re: Confused about FHA Loans...

Anonymous — Fri, 26 Dec 2008 01:09:19 GMT

Happy Holidays bsal!

With your scores of 660 TU, 700 EX and 717 EQ that means

your qualifying middle score of 700 is quite good. You should

be able to qualify for whatever mortgage you want.

If you go FHA, only a 3% down payment is required. FHA funds

the remaining 97%. You can even roll closing costs into the cost

of the loan. 30yr fixed rates are as low as 5.25% with 0 points.

I'm not sure where in the MD/VA/DC area you are, but if you live

in a small suburb you might look into a USDA loan. A 620 FICO

is all that's needed, and you should easily qualify for the lowest

rate (about 5.375% 30yr fixed the last time I checked). USDA loans

are 100% financing and you can roll closing costs into that loan as well.

And since you're a first time homebuyer, there are great programs

for folks just like you for as little as 5% down and rates in the

5 - 5.5% range for a 30yr fixed rate. You'll have to come up with closing

costs, though, so depending on the situation you might be able to get

some assistance depending on how the deal is structured.

So you have many options, bsal. I'm sure some of the other experts

like Shane can chime in with more specifics, but I'd advise you to

speak with a mortgage broker and see what's out there for you.

Also check with your credit union if you're a member. They offer

great rates and they tend to close pretty quickly.

It looks like you're in a great spot, bsal. Pls keep us posted on your

progress. Happy Holidays!

CanDo

"The right attitude is everything"

Message Edited by CanDoAttitude on 12-25-2008 05:09 PM

Re: Confused about FHA Loans...

bsal — Fri, 26 Dec 2008 03:13:05 GMT

WOW i'm so happy to hear that, well wit that being said i think i'm going to call a real estate agent and get some more info on these fha programs and usda programs, the only thing i need to do now is save 3% for down payment, at first i was thinkin bout just buying a car but now i relize i want ownership and equity, i just hope with my income i can get into something nice i would say i make 50k a year no kids no car loan, no credit cards what do u guys think?

Re: Confused about FHA Loans...

Anonymous — Fri, 26 Dec 2008 11:55:09 GMT

You seem to have your priorities straight, bsal.

If you're going to have a roof over your head, you might

as well own it, right??? The VA/MD/DC area is very

income diverse, so I'm sure you'll be able to

find something you like well within your price range

based on your income. Checking with a realtor is

a good first step.

Edit to Add: Actually, it would be smarter if you spoke with

a mortgage broker/lending officer first to determine exactly

how much house you qualify for. Once they give you a

number, then speak to a Realtor. You don't wanna get

your hopes up over a house you like but can't afford.

Knowing what you can afford right up front will help you

and the Realtor you work with stay focused on finding

what you want.

Good luck to you!!!

CanDo

"The right attitude is everything"

Message Edited by CanDoAttitude on 12-26-2008 03:55 AM

Re: Confused about FHA Loans...

bsal — Sat, 27 Dec 2008 00:14:45 GMT

I just heard from reading from other sites is it true in order to get approved for a fha loan u have to have 3 traidlines? because i only have one revoling credit line and 1 installment loan witch is about to be paid off, so is that true?

Re: Confused about FHA Loans...

Anonymous — Sat, 27 Dec 2008 09:36:42 GMT

Yes, it is true that most lenders like to see 3 tradelines

paying as agreed before approving a mortgage.

However, in your case, if you have only 2 tradelines and a high

FICO score of 700 or better (which you do), then that could be

considered a "compensating factor". It just depends on which

lender you use, so I'd shop around a bit to find one that is

comfortable with just 2 tradelines given your situation.

In other words, 3 tradelines is a guideline...not an absolute.

But just do some checking to make sure it's ok with your

lender of choice.

Hope this helps, bsal. Good luck to you!!!

CanDo

"The right attitude is everything"

Re: Confused about FHA Loans...

Anonymous — Sun, 28 Dec 2008 02:33:14 GMT

I'm disabled and looking into purchasing a more accessible home. My scores are 512, 540 and 612. Would I qualify for a USDA RD loan? I live in Missouri if that helps. Thanks

Re: Confused about FHA Loans...

Anonymous — Sun, 28 Dec 2008 03:29:17 GMT

Hi Mar44,

Unfortunately, you need a minimum middle FICO score

of 620 in order to qualify for the USDA Rural Development

Loan. Based on the scores you posted your mid score is

only 540, so you'll need at least another 80 points.

Some compensating factors like strong income, stable employment,

etc. are always taken into account. But right now the biggest

thing for you is getting your score up. Once you do, USDA loans

are 100% financing and rates are roughly between 5.3 to 5.99%.

The higher your FICO score, the lower the mortgage rate you qualify for.

You can always check with a local mortgage broker in your area

who specializes in USDA loans. They can give you more specific

guidance.

Good luck to you!!!!

Edit to Add: You may have a better chance for an FHA mortgage given

your scores. Minimum middle FICO is only 580, so you'll only need 40 pts

to qualify for that loan. However, to qualify for the lowest rates you need a

620 or better. Current mortgage rates for 30yr fixed are about 5.25% with

0 points; 15 yr fixed run about 4.75% with 0 points. A 3% down payment

is needed, but local non-profits and/or charities can gift that money to you

so you won't have to pay it back.

So once again, I'd check with a local mortgage broker to see what

your options are...

CanDo

"The right attitude is everything"

Message Edited by CanDoAttitude on 12-27-2008 07:29 PM

Re: Confused about FHA Loans...

Anonymous — Sun, 28 Dec 2008 13:24:28 GMT

@Anonymous wrote:
I'm disabled and looking into purchasing a more accessible home. My scores are 512, 540 and 612. Would I qualify for a USDA RD loan? I live in Missouri if that helps. Thanks

I would recommend looking over your reports and making notes on the things that are pulling your scores down. Then head over to the Rebuilding Your Credit forum and ask the folks what can be done about them. For example, if you have late marks you can ask creditors to remove them. If you have collections you can ask the creditors to agree to delete them if you pay them. If you have any credit cards that are maxed out or nearly maxed out, paying them off will give you a nice point boost too. Spending a few months working on your credit could make it a lot easier to qualify for a loan.

Re: Confused about FHA Loans...

Anonymous — Sun, 28 Dec 2008 13:45:18 GMT

Excellent advice, rmily. I'm glad you pointed that out.

I was so fixated on mortgage options based on current

scores that I overlooked repairing what was wrong

in order to boost scores. In the long run, this is a much

better option.

Thanks again for pointing that out. We're always smarter

together than we are individually.

CanDo

"The right attitude is everything"

Re: Confused about FHA Loans...

Anonymous — Mon, 29 Dec 2008 09:41:23 GMT

@Anonymous wrote:
@Anonymous wrote:
I'm disabled and looking into purchasing a more accessible home. My scores are 512, 540 and 612. Would I qualify for a USDA RD loan? I live in Missouri if that helps. Thanks
I would recommend looking over your reports and making notes on the things that are pulling your scores down. Then head over to the Rebuilding Your Credit forum and ask the folks what can be done about them. For example, if you have late marks you can ask creditors to remove them. If you have collections you can ask the creditors to agree to delete them if you pay them. If you have any credit cards that are maxed out or nearly maxed out, paying them off will give you a nice point boost too. Spending a few months working on your credit could make it a lot easier to qualify for a loan.

Thanks for the advice everyone. I'm going to see what I can do about a few things listed as "on collection" that have actually been paid off and try the "pay for the delete" thing.