Can I Qualify For FHA Loan With Poor Credit?

Tips In Qualifying For FHA Loan With Poor Credit

Many consumers had extenuating circumstances during their lives such as loss of employment, loss of business, divorce, medical issues, or other personal circumstances where it affected their incomes which in turn affected their ability to pay their debt obligations. Being late on a debt obligation will affect the consumer’s credit because the creditor will report it to the credit bureaus. The main three giant credit reporting agencies in this country is Experian, Equifax, and Transunion. If you are applying for a mortgage, the lender will pull credit from all of these three credit bureaus and not just look at the credit scores but will also review your overall credit payment history and payment patterns. Having poor credit does not disqualify you for a FHA Loan. FHA Loans are the most popular mortgage loan program in the United States. The United States Department of Housing and Urban Development, HUD, is the parent of FHA. FHA is not a mortgage lender and it does not originate nor fund FHA Loans. FHA main role and function is to act as a government mortgage insurance entity where it will insure FHA Loans that is originated and funded by private banks and mortgage lenders who are HUD approved lenders and follow all of the FHA mortgage guidelines in the event if the FHA borrower defaults on their FHA Loan.  Since FHA insures FHA Loans to HUD approved mortgage lenders, FHA borrowers are offered very low mortgage rates with only 3.5% down payment. However, FHA does require a one time upfront FHA mortgage insurance premium, also called UFMIP, and a lifetime annual FHA mortgage insurance premium of 0.85% for the lifetime of the 30 year FHA fixed rate mortgage loan.  Annual FHA mortgage insurance premium is mandatory on all FHA Loans no matter how much the borrower puts down on a home purchase. Can I qualify for FHA Loan with poor credit? Absolutely.

Definition Of Poor Credit When Qualifying For FHA Loan With Poor Credit

Having poor credit and the definition of poor credit can vary. When it comes to qualifying for FHA Loan With Poor Credit, there are mortgage lenders like myself that specialize in originating and funding bad credit mortgage loans fully understand that borrowers went through periods of bad and poor credit due to extenuating circumstances such as loss of business, loss of employment, medical issues, divorce, or other extenuating circumstances. There are minimum credit score requirements to qualify for a FHA Loan, however, just meeting the mandatory minimum credit score requirements does not automatically qualify a FHA borrower. Credit payment history is extremely important and mortgage lenders want to see re-established credit after periods of bad credit and most importantly, pretty much all FHA mortgage lenders want to see timely payment history on all debt payments for the past 12 months.

Late Payments After Bankruptcy And Foreclosure

Qualifying For FHA Loan With Poor Credit: Can I get mortgage after late payments after bankruptcy and foreclosure?

Late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale is considered extremely bad and most mortgage lenders will not approve a mortgage borrower who had any late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. However, I can help folks with late payments after bankruptcy and foreclosure if they get an approve/eligible per Automated Underwriting System or with a manual underwrite, a good letter of explanation for why the borrower had a late payment after bankruptcy and/or foreclosure. Late payments after bankruptcy and foreclosure is not a deal killer, however, it is viewed as a second offender and does not look for the borrower. If you have been turned down for a FHA Loan due to late payments after bankruptcy and/or foreclosure, please contact me at 262-716-8151 or email me at gcho@gustancho.com and I will be able to help you.

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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