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FHA loan with a defaulted student loan

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Anonymous
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FHA loan with a defaulted student loan

I am doing the rehabilitation program for my defaulted student loan. After 9 months my loan will be out of default. I dont want to wait that long to apply for a fha loan. I heard that  you cant qualify for a fha loan if you have a defaulted student loan. I read on one of the fha websites that as long as you are paying on the loan that I can still qualify for a loan. Does anyone have any experience with this situation?

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Anonymous
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Re: FHA loan with a defaulted student loan

you have to be able to show a full year of on time payments if the loan is in default.

 

If under your current agreement your loan is rehabbed at 9 months to show no delinquencies, then that may suffice as long as there are no negative remarks on CR.  That said, after the 9 months, it may take another month or two for the CR to update the file as rehabbed.  It is not overnight.  SO in reality it is going to be close to a year anyways.

 

Last, was there some circumstance that caused the default.  Generally speaking if you have had a debt go into defualt fairly recently, you are not in the position to buy a home when you factor all the real costs of home ownership, etc.  Of course, there are always circumstances and exceptions but you want to be careful.

 

But, you will have to wait at least the 9 months or maybe a year.

 

 

Message 2 of 4
RedHairedLady
Established Member

Re: FHA loan with a defaulted student loan

What is your credit score? FHA recently raised the minimum required credit score for their loans, to 620. Also, have you looked into your state's firat time homebuyer loan programs? Every state has a housing finance agency that provides funding to banks to make mortgages to first time homebuyers. Some have more flexible credit requirements than for regular FHA loans, and the interest rates are fantastic (I used to work for a mortgage company that bought and serviced state housing finance agency loans). They have income limits, but the limits are fairly high, especially in high cost of living states, like California. Some of those state loan programs also offer downpayment assistance as well.

 

Hope this helps.

Message 3 of 4
Anonymous
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Re: FHA loan with a defaulted student loan

Most banks are now at 640 for FHA loans and most of the local or state programs tend to have at least equal to, but often higher than, FHA programs.  That may only have become true in the last 2 years or so (not sure about before that), but it is generally true now.

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