Lender411.com Articles FHA Loans

Link to this page Print RSS  

FHA questions and answers:

Can a borrower that is currently in Chapter 13 bankruptcy obtain an FHA loan? Yes, as long as they have been in it long enough to establish a pattern of paying the plan on time for at least a year and have an acceptable credit score. Having an acceptable credit score could mean 600 for some lenders and 620-640 for others.

What is the minimum required credit score to qualify for an FHA loan? With my company, it is 560. Most lenders that don't service their own loans are requiring 620 or above. Some are at 640.

How long does it take to close an FHA loan? It is taking about 3-4 weeks on average for direct endorsement FHA lenders. Of course, 30 days is still the standard. It could take a lot longer if you go with a lender that does not have direct endorsement capabilities, perhaps as long as 2-3 weeks.

In considering an offer on a listing that is coming from a buyer that needs FHA financing, can you give me any tips to make the seller feel more comfortable in accepting it?

A letter that says pre-approved is better than one that says pre-qualified. Pre-approved means that the loan has been approved in one of two ways: either through automated underwriting or it has been approved by a live FHA delegated underwriter. Pre-qualified is just an opinion by a loan officer, probably after seeing the borrower's credit report and possibly income and asset documentation.

Most loan officers are able to run the loan through automated underwriting these days, but the problem is that the underwriting decision with automated underwriting is only as good as the data that has been entered by the loan officer. So what I am telling you is that if the income is averaged incorrectly or the cash in the bank turns out to be different, there could be problems after the loan is processed and underwritten by a live underwriter.

Some companies, such as mine, allow the loan officer to run the customer's loan application through both automated underwriting and a live underwriting before the buyer finds a home in what we call Pre-approval. That is really the safest procedure to determine if you have a firm loan approval and a solid contract.

Alternative Credit: Can you still get an FHA loan with alternative credit? The answer is yes, but the guidelines are a little tougher now. One absolute is that the borrower must have a satisfactory rent reference for the past year. That means they cannot be living rent free with their relatives. They also need at least two other references, such as utilities that are in their name.

Link to this page Print RSS  

Page: 1 of 2

1

2