4 Questions That You Can Have about FHA Loans with a Bad Credit

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Insured by the Federal Housing Administration, FHA loans are a perfect home loan option for low to moderate-income group people who want to buy a home and looking for the financing option. As these loans are government-backed, the lenders don’t have a sky-scraping requirement. And so, getting approval is easy for buyers like you.

You can look for the lenders who offer FHA government home loans bad credit in Texas and get the financing for buying a home of your dream.

Do you want to know more? Here are some common questions and answers on bad credit FHA loans.

  1. What is the lowest score to qualify for an FHA loan?

The minimum credit score requirement can vary based on the type of FHA loan that you want to apply for. In order to get the maximum level of financing on a conventional home loan program, borrowers need to have a good credit score. But with an FHA loan, the requirement is much lenient. You can get a home loan approval with as low as a 500 credit score. But the lower the credit score, the less you can borrow. Besides, keep this in mind that different lenders may have their own credit guidelines. So, it is better to get in touch with a reputable FHA-approved lender and ask him or her about the specific requirements.

  1. Can a borrower get a loan without a credit history?

While the FHA prefers to see a traditional credit history, it is possible to get approval for an FHA even without this. You can do this by using what is familiar as “non-traditional credit references.” These refer to the references that you can use to help build your case as a responsible, bill-paying adult which is not tied to actual lines of credit. Some examples include letters from a landlord, a utility company, a phone service provider, etc. To get more details or know about other requirements, you should talk to a lender

  1. Can a borrower get an FHA loan approval if he or she filed bankruptcy?

For a Chapter 7 bankruptcy filing, the FHA generally wants to see at least 24 months pass between the date of the bankruptcy discharge, as well as the date of a mortgage application. Keep this in mind that it is two years from the discharge to the application, not the closing. There are some exceptions to the rule. Borrowers who had a one-time life event that directly led to the bankruptcy and show their credit has since been reestablished can ask their lender to make an exception. For Chapter 13 bankruptcy filing, the FHA wants to see that the mortgage applicant has made payments to creditors on time for at least twelve months. They may also want written approval of a court-appointed trustee.

  1. What happens if the borrower had a foreclosure?

Yes, you can qualify for an FHA loan even if you had a foreclosure. But the FHA has a three year lockout period for homeowners who have been foreclosed upon or who have received a deed-in-lieu of foreclosure. Like with the bankruptcy guidelines, the FHA may allow exceptions in some circumstances. Ask your lender about this.

As you get the answers to your questions, now, start looking for an FHA-approved lender and apply for the loan today!

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