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HELP! Need help with FHA Credit Qualifications!

New Member

HELP! Need help with FHA Credit Qualifications!

I'm looking into purchasing a 4BD 2BA home on 3 acres of land. Needs approximately 5-8k in repairs (planning on doing the 203k for this) as everyone knows FHA requires a 580 mid. My bank (I have checking and savings with) offers FHA, I plan on going through them with high hopes they will be my best bet at approval since I bank there. My mid is a 565. I have 2 revolving credit lines with combined balances of approximately $250. I plan on paying these off within the next 3 days. According to the fico score simulator this will boost my mid to a 603 which will make me eligible for the FHA loan. Does anyone know if by doing this it will actually boost my score? Or have any other suggestions? I need to bring my mid up at least 20 points by the first of the month. PLEASE HELP!
10 REPLIES
Moderator

Re: HELP! Need help with FHA Credit Qualifications!


KelliWithAK wrote:
I'm looking into purchasing a 4BD 2BA home on 3 acres of land. Needs approximately 5-8k in repairs (planning on doing the 203k for this) as everyone knows FHA requires a 580 mid. My bank (I have checking and savings with) offers FHA, I plan on going through them with high hopes they will be my best bet at approval since I bank there. My mid is a 565. I have 2 revolving credit lines with combined balances of approximately $250. I plan on paying these off within the next 3 days. According to the fico score simulator this will boost my mid to a 603 which will make me eligible for the FHA loan. Does anyone know if by doing this it will actually boost my score? Or have any other suggestions? I need to bring my mid up at least 20 points by the first of the month. PLEASE HELP!

^^^FHA guidelines allow mid-scores below 580. However, most lenders want your mid-score to be higher.  The best course of action is to ask your banks LO what their guidelines are before you make a mortgage application.  Most banks are very conservative now so they tighten up their own guidelines more than what FHA requires. 

 

IMO you would be better off not going with a bank. Use a mortgage banker that originates, underwrites and funds their own mortgages.  They only issue mortgages and not checking accounts or any other financial product. Sometimes these lenders are called non-bank lenders. 

 

Check the rebuilding section here on MyFICO too. You don't want to have a zero balance on both of your cards. Let one of them report $10-$20 and the other zero to optimize your score. I have also noticed that there is quite a lag time in reporting by the credit card co's.  

Message 2 of 11
New Member

Re: HELP! Need help with FHA Credit Qualifications!

Thank you so much. My bank also offers in house. The realtor suggested trying it instead of FHA. I'm estimate the total cost to be around 70k including 8k for repairs. I only have about 3k to use for a DP/Closing. Homes are few and far between in my area so it could be a year or more before another home like this one comes available. I need to get the ball rolling on it asap. Should I go ahead and try to get pre qualified or wait until after the 1st and see if my cc's are updated?
Message 3 of 11
Valued Contributor

Re: HELP! Need help with FHA Credit Qualifications!

Are those mortgage scores or credit karma? You need your 3 mortgage scores , can only get by buying 3b or monitoring. I do the monitoring and cx within 7 days. Then come let us know . But if that is your mid mortgage score we need to know income and DTI etc, I do not believe a bank is going to go down to 565 I'm sorry to say . You will have problems finding a lender but maybe it's possible
Message 4 of 11
Frequent Contributor

Re: HELP! Need help with FHA Credit Qualifications!


KelliWithAK wrote:
I'm looking into purchasing a 4BD 2BA home on 3 acres of land. Needs approximately 5-8k in repairs (planning on doing the 203k for this) as everyone knows FHA requires a 580 mid. My bank (I have checking and savings with) offers FHA, I plan on going through them with high hopes they will be my best bet at approval since I bank there. My mid is a 565. I have 2 revolving credit lines with combined balances of approximately $250. I plan on paying these off within the next 3 days. According to the fico score simulator this will boost my mid to a 603 which will make me eligible for the FHA loan. Does anyone know if by doing this it will actually boost my score? Or have any other suggestions? I need to bring my mid up at least 20 points by the first of the month. PLEASE HELP!

I think you need to let this one go.  Even if you get your middle score up (assuming it is even a mortgage score you are looking at), you don't have enough money for a down and closing.  What is your DTI? Qualifying for a morgage is far more complicated than just a credit score.  And as many have said, not many lenders will accept a 580. I would focus on your credit for the next year, and then you will be in much better shape for a mortgage.  

Sept 15 -- All mid 400s
Jan 16 -- All mid 500s
Current: Knocking on 700s
Message 5 of 11
Valued Contributor

Re: HELP! Need help with FHA Credit Qualifications!

Agree with 2, we got ourselves here and it takes dedication and lots of time to get ourselves out!!! Patience and Persistence
Message 6 of 11
New Member

Re: HELP! Need help with FHA Credit Qualifications!

I have the 3b. 565 is my mid mortgage score on the 3B. All I owe is $248 on 2 separate cc's. $101 to Capital One and $147 to Comenity. My income is $878 bi weekly. I had 2 accounts in collections that were for $36 and $47 that I paid off last month. They were medical and I had no clue I even owed them until I came across myfico. Car was paid off in March and no student loans or loans of any sort. Just those 2 cc's. :/

Message 7 of 11
Established Contributor

Re: HELP! Need help with FHA Credit Qualifications!

It seems like you really want to be told to go for it. All you can really do it is talk to your preferred lender and see if they are willing to take your case on. There are guidelines published and yes 580 has been mentioned and even lower but be aware that below certain levels FHA actually requires 10% down. Anyways talk to your lender and see what they have to say.
Message 8 of 11
New Member

Re: HELP! Need help with FHA Credit Qualifications!

I will be "going for it" either way. I suppose I am just looking for the best way to do so. I am well aware that a 580 mid is the minimum for 3.5% and any score below that requires 10. That's why I emphasized raising my score, not waiting. Or another financing method aside from FHA. I just need suggestions on POSSIBLE ways to make it working 

Message 9 of 11
Frequent Contributor

Re: HELP! Need help with FHA Credit Qualifications!


KelliWithAK wrote:

I will be "going for it" either way. I suppose I am just looking for the best way to do so. I am well aware that a 580 mid is the minimum for 3.5% and any score below that requires 10. That's why I emphasized raising my score, not waiting. Or another financing method aside from FHA. I just need suggestions on POSSIBLE ways to make it working 


If you have to have this done by end of the month, here is what you are facing:

  1. Raising your mid-score by a minimum of 15 pts.  Paying down your balances may do that, but will they report in time?
  2. Making sure your preferred lender is allowed to do 203(k) loans --not all are, you can check the HUD website--and that any of the approved lenders will underwrite with a 580.
  3. Enough cash on hand for the 3.5% down payment plus closing costs.  Are the sellers willing to contribute to closing?
  4. Cash on hand for any construction bid costs, apprasials, etc. 
  5. An appraisal that comes in high enough (after estimated repairs have been done) to cover the purchase price, the repairs, any possible contingency requirements, less your 3.5% down payment.
  6. Making sure your payment including PMI and Insurance is under 31% of your income --you should be fine here as long as the interest rate is ok.
  7. Keeping your fingers crossed that nothing changes in your credit score between pre-approval and closing.  Creditors can smell blood in the water.
  8. Nothing happens that you need any extra money.  No "life happens" can happen for quite awhile.

So yes, it is certainly possible.  I believe anything is possible if you find the right route, but it is going to be one hell of a trip to get there.  Good luck!

Sept 15 -- All mid 400s
Jan 16 -- All mid 500s
Current: Knocking on 700s
Message 10 of 11