topic Re: Can I qualify for an FHA loan? in Mortgage Loans

Can I qualify for an FHA loan?

coachb123 — Sat, 25 Feb 2012 23:56:19 GMT

Would like to apply for an FHA loan around Sept. of this year. Have worked hard to clean up my report. I currently have one collection left that is due to fall off in Sept so I am not worried about that but I have 2 charge-offs (Credit One and HSBC) that will be on my report when they are pulled for mortgage. Both are outside the SOL and are for small amounts ($800 for one and $500 for the other). Are these chargeoffs going to be a problem? All my scores are around 640. Also I have 3 small credit cards that I just opened in January. They all have $300 limits and I am using them very little. I leave a $5 balance on them.

How do I look?

Re: Can I qualify for an FHA loan?

namvet — Sun, 26 Feb 2012 00:15:27 GMT

@coachb123 wrote:
Would like to apply for an FHA loan around Sept. of this year. Have worked hard to clean up my report. I currently have one collection left that is due to fall off in Sept so I am not worried about that but I have 2 charge-offs (Credit One and HSBC) that will be on my report when they are pulled for mortgage. Both are outside the SOL and are for small amounts ($800 for one and $500 for the other). Are these chargeoffs going to be a problem? All my scores are around 640. Also I have 3 small credit cards that I just opened in January. They all have $300 limits and I am using them very little. I leave a $5 balance on them.

How do I look?
You look ok for a conventional loan assuming you have a decent down payment. Not sure about FHA.

Re: Can I qualify for an FHA loan?

coachb123 — Sun, 26 Feb 2012 00:50:02 GMT

Can't afford conventional. Have to have an FHA so I can have a lower downpayment.

Re: Can I qualify for an FHA loan?

Hawksfan — Sun, 26 Feb 2012 02:01:05 GMT

I hope so, your situation is pretty close to mine. I have a collection in the amount of $800.00 outside the SOl at about five years and another charge off for 66 dollars. I have about 640's on my fico scores and am looking to do FHA in the next few months. I opened some credit cards about 18 months ago and have kept my nose clean on those. I have 3 cap one cards, a QT gas card and a Macy's card. My scores have been on the way up for months now and I keep 0 balances on my CC's using them at least once every six months! Good luck, I've heard I'm a "slam dunk" for an FHA with my credit so I hope you are too! I've heard the bank you use may ask for those fees to be paid in closing. So make sure whatever downpayment money you have in mind you set aside enough money to cover those collections if the bank asks at closing. Don't pay them until you are at the closing table and it should be done through Escrow if required. If they don't require you to pay them off then wait till after the house is closed on and then decide if paying back makes sense.

Re: Can I qualify for an FHA loan?

namvet — Sun, 26 Feb 2012 02:04:57 GMT

I'll bump this up for someone who has experience in FHA loans.

Re: Can I qualify for an FHA loan?

LIGHTNIN — Sun, 26 Feb 2012 02:17:30 GMT

I'm afraid you will have to wait alittle longer then September . Maybe you can try, in Dec or Jan.

Lenders will wonder why, the CO's with small amounts wasn't paid. I would suggest paying them.

Also it makes lenders nervous when new credit is opened within 12months of applying for a mortgage.

Buying a home will be the Biggest purchase, you will EVER make. Take your time and you'll be so glad you did.

Think about the money you will have saved, because of the lower interest rate, due to the higher FICO scores.

Use this time to figure out what you like in a house.

Throw more money into the down payment and for the closing cost.

Oh and lets not forget, putting money into the emergency fund, for those bills that pop up out of nowhere.

Then you'll be able, to enjoy your dream home.

Re: Can I qualify for an FHA loan?

Hawksfan — Sun, 26 Feb 2012 02:55:19 GMT

Won't paying them seriously damage his credit score?

Re: Can I qualify for an FHA loan?

Anonymous — Sun, 26 Feb 2012 06:46:30 GMT

You look great on the score and derog side of things. Dont pay on those charge offs like someone suggested before you will screw yourself. Only pay if it is demanded on the closing table like mentioned before.

Only other things you would need to be a slam dunk.. You will need enough cash reserves after the down payment and closing costs to cover a few months of your new rent amount. You will want 2yrs of work experience in your current field and good outlook on keeping your job. No late rent payments in the last 12 months and they may want 3 tradelines that were positive and at least aged 12 months, with preference to active ones. Good enough DTI, 31/43% your prospective mortgage payment will need to be no more than 31% of your monthly income, and no more than 43% of your total debt. (car loan, cc min payments, other loans etc.) not including utilities, food etc.. Income, score, liquid reserves may be compensating factors to give you some wiggle room if you aren't perfect in one of these areas.

Re: Can I qualify for an FHA loan?

boomhower — Sun, 26 Feb 2012 13:15:27 GMT

Those CO's won't be an issue at all. They are outside of SOL so they are old and small, they likely won't need to be paid at all. As long as your scores and DTI ratios are OK you are good to go for FHA. I'll second the sentiment of making sure you have plenty of money in the bank. I have spent more money in the last two weeks while moving than I ever imagined. Little things keep popping up, water valve here, toilet there, the tools needed to do the job, etc. It all adds up real quick. Not to mention furniture. Oh the furniture.....