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Score requirement for FHA home loan?


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Here are the credit requirements of FHA

Credit Requirements

minimum credit score

When the borrowers' representative credit score is under 620, refer to LP levels

age of report

May be up to 120 days old at the time the loan closes (180 days for proposed construction)

Updated, written verifications must be obtained when the age of the documents exceed these limits

Verification forms must pass directly between lender and provider without being handled by any third party

Credit report

A credit report is required for all borrowers on the note

This includes a Non purchasing spouse even though they will not be included on the note. . Also required when non purchasing

Spouse does not have a social security number.

Tri-Merged reports are acceptable

Business credit reports

Required if the business is a:


Sub S Corporation



When the property was included in a Chapter 7 bankruptcy that was caused by circumstances beyond the borrower's control (such as the death of the principal wage earner or serious long-term uninsured illness, etc.), the borrower may be eligible after a minimum of 12 months as per the 4155 guidelines.

A borrower paying off debts under Chapter 13 of the Bankruptcy Act may also qualify if one year of the pay-out period has elapsed and performance has been satisfactory, and the borrower also receives court approval to enter into the mortgage transaction


An applicant who has gone through foreclosure proceedings or given deed in lieu of foreclosure on a previously owned property may be considered for loan approval if the foreclosure occurred three years preceding the application date and was a result of extenuating circumstances that were beyond the control of the owner occupant applicant

For example: a serious long term illness, death of the principal wage earner, or loss of employment due to factory shutdown, etc., and if the applicant has since reestablished good credit and demonstrated the ability to manage financial obligations

All aspects of the loan including savings pattern, cash reserves, and amount of down payment will be taken into consideration

Applicants with prior foreclosures will be considered only for loans secured by owner-occupied properties.

Judgments/Tax Liens/adverse credit

May remain unpaid provided the lien holder subordinates the tax lien to the FHA-insured mortgage and, if any regular payment are to be made, they are included in the qualifying ratios

Tax liens may be eligible for inclusion in a refinance in some cases refer to HUD's 4155. for further detail

CAIVRS (Credit Alert Interaction Voice Response System)

FHA requires that each borrower be screened for any presently delinquent claims or any claims paid within the past 3 years on a loan insured/guaranteed by the government

The information can be located with the borrower's social security number via the FHA Connection.

Payoff Debt to Qualify

Whether installment or revolving:

Debts lasting less than ten months must be counted if the amount of the debt affects the borrower's ability to make the mortgage payment during the months immediately after loan closing

Revolving Debt

A minimum of 5% of the unpaid balance or $10.00 whichever is greater, must be used to calculate the monthly obligation if no payment is noted on the credit report

Note: Obligations not to be considered as a debt (nor subtracted from gross income) include:

Federal, state and local taxes

FICA or other retirement contributions such as 401(k)s (including repayment of debt secured by these funds), Commuting costs, union dues

Open accounts with zero balances

Automatic deductions to savings accounts

Child care and other voluntary deductions

Deferred obligations (beyond 12 months)


Because of the tax consequences of alimony payments, the lender may choose to treat the monthly alimony obligation as a reduction from the borrower's gross income in calculating qualifying ratios rather than as a monthly obligation.

Co-signed obligations

If the individual applying for a FHA-insured mortgage is a co-signer or otherwise co-obligated on a car loan, student loan, or any other obligation including a mortgage, contingent liability applies (i.e. the debt must be counted in the borrowers liabilities) unless the lender obtains documentation that the primary obligor has been making payments on a regular basis and does not have a history of delinquent payments on the loan over the past twelve months.


If a borrower sells a home that is currently insured by HUD allowing the loan to be assumed by a new mortgagor, the current mortgagor must sign a release of liability and the new mortgagor must get lender approval to complete the assumption process.

If the borrower sold the property, with or witho...

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