Can I Qualify For FHA Home Loan With Poor Credit Scores

Qualifying For FHA Home Loan With Poor Credit Scores

Many first time home buyers think they cannot get a home loan with bad credit.  Every consumer has had a period in their lives where they were unemployed or lost their businesses where they could not keep up with their monthly obligations and their credit scores suffered.  Many even had to file bankruptcy and/or had to go through a foreclosure, deed in lieu of foreclosure, or short sale.  The good news is that first time home buyers and home buyers can get a home loan with bad credit. Most first time home buyers worry about getting a mortgage because they do not think they will qualify for a FHA Home Loan With Poor Credit and low credit scores. FHA Loans is the most popular loan program in the United States because of its lenient credit requirement.

First Time Home Buyers Qualifying For FHA Home Loan With Poor Credit Scores

How bad can your credit be to qualify for a home loan with bad credit is the questions I get asked every day, especially from first time home buyers.  You can have prior bad credit to qualify for a home loan with bad credit.  However, most mortgage lenders want to see at least a 12 month history of timely payment history.  Many first time home buyers are even afraid to seek a free consultation from a mortgage lender because they feel they do not qualify for a home loan with bad credit.  Even if you have bad credit now and have recent late payments, I strongly recommend first time home buyers to seek the consultation of a mortgage loan officer to prepare themselves for a mortgage loan and see what they need to do to qualify for a mortgage loan. One good thing about having poor credit is that it is like a hangover. As time passes, your bad credit items have less and less of an impact on your credit scores. Credit scores go up and down and there are quick fixes to maximize and boost your credit scores. It is best to seek the advice of a loan officer before you start a credit repair regiment. There is no cost to consult with a loan officer and your loan officer will help you fix your credit so you can qualify for a mortgage.

HUD Guidelines

As mentioned earlier, you can have bad credit and qualify for a home loan with bad credit. 

  • How bad can your credit be is the question and do you have recent late payments is another matter. 
  • Borrowers can qualify for FHA Home Loan With Poor Credit.
  • Borrowers do not have to pay off outstanding collections and/or charge off accounts to qualify for FHA Loans.
  • To qualify for a 3.5% down payment FHA insured mortgage loan, you need a minimum credit score of 580 FICO. 
  • Mortgage lenders do not want to see any late payments in the past 12 months. 
  • One or two late payments is not a deal breaker but you will need a good letter of explanation on why you were late. 
  • Mortgage lenders do not want to see any bank overdrafts in the past 12 months either. 
  • There are mortgage lenders that do not want to see any late payments after a bankruptcy and/or foreclosure, especially banks. 
  • Re-established credit after a period of bad credit is key in getting a home loan with bad credit. 
  • First time home buyers should have rental verification. 
  • Rental verification carries a lot of weight in the mortgage approval process. 

Not all FHA Lenders have the same credit and debt to income ratio requirements. If you are told that you do not qualify for a FHA Home Loan With Poor Credit, find out what the reason is. Most lenders have lender overlays and just because you may not qualify with one lender does not mean you cannot qualify with a lender that has no overlays on FHA Loans. If you are thinking of getting pre-approved, call The Gustan Cho Team at CrossCountry Mortgage at 262-878-1965 or text Gustan on his cell for faster response at 262-716-8151. You can also email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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