What are HOME LOANS FOR ALL CREDIT TYPES

FHA Loan With Poor Credit And Collection Accounts

Gustan Cho The Mortgage Expert
July 17, 2019 - 3 min read
Gustan Cho Associates are mortgage brokers licensed in 48 states
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This Article Is ABout Qualifying For FHA Loan With Poor Credit And Collection Accounts 

Tips In Qualifying For FHA Loan With Poor Credit:

  • Many consumers had extenuating circumstances during their lives
  • 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 happens among the best of us
  • 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
  • Lenders will not just look at the credit scores
  • Lenders will also review the overall credit payment history and payment patterns
  • Having poor credit does not disqualify you for an FHA Loan

In this article, we will cover and discuss Qualifying For FHA Loan With Poor Credit And Collection Accounts.

About FHA Home LoansFHA Loan With Poor Credit

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
  • 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 are originated and funded by lenders who are HUD-approved lenders
  • Lenders follow all of the FHA mortgage guidelines
  • In the event, if the borrower defaults on their FHA Loan, HUD will insure lenders against the loss sustained
  • Since HUD insures FHA Loans to HUD-approved lenders, borrowers are offered very low mortgage rates with only 3.5% down payment
  • However, FHA does require a one time upfront mortgage insurance premium, also called UFMIP, and a lifetime annual mortgage insurance premium of 0.85% for the lifetime of the 30-year fixed-rate mortgage loan
  • Annual FHA mortgage insurance premium is mandatory on all FHA Loans
  • This holds true 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 lenders like Gustan Cho Associates 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
  • Loss of business, loss of employment, medical issues, divorce, or other extenuating circumstances happen among the best of us
  • There are minimum credit score requirements to qualify for an FHA Loan
  • However, just meeting the mandatory minimum credit score requirements does not automatically qualify a borrower
  • Credit payment history is extremely important

Mortgage lenders want to see re-established credit after periods of bad credit and most importantly, pretty much all lenders want to see timely payment history on all debt payments for the past 12 months.

Late Payments After Bankruptcy And ForeclosureLate Payments After Bankruptcy And Foreclosure

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

Late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, and a short sale is considered extremely bad. Most mortgage lenders will not approve a borrower who had any late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. However, Gustan Cho Associates 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 an FHA Loan due to late payments after bankruptcy and/or foreclosure, please contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com and we will be able to help you.