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FHA loan with old charge offs

My new wife and I are really anxious to buy a home of our own but first I want to see if it is even possible at this juncture. Her score is fine (high 600's) but mine is the concern. I haven't pulled lately but last I checked we're talking middle score in the 540 range. I just opened and secured credit card to help get some more current positive credit history so hopefully that will help as well over the next few months. The reason my score is sooooo poor dates back to some personal issues I went through in 2006-2008 that caused me to default on student loans and come credit cards I had back while I was trying to finish school and work full time while also raise my younger brother. None of that really matters but here we are 2013 and most of those profit/loss accounts are set to fall off starting December of this year and continue through 2014. If I have to wait until then to purchase a home then so be it but like I said, I'm just exploring my options.My other concern is that my compensation plan will eventually switch over to full commission once I've been with the company a bit longer and I know what a pain that can be for calculating income. Currently I'm still salaried with a bonus structure as well and if it's possible for us to buy something now on my wife and I's salary then that would be great so that I don''t have to deal with the whole commission situation.We are both full time employed with work histories. Combined gross yearly income is approx $70k. We own our home free and clear and neither of us have car payments. She has a few credit card payments and I have current student loans (in deferral) in addition to the profit/loss student loans from 6+ years ago. Are there any FL lenders out there that go sub 580? I know of a 580 lender just wondering if there is anything else out there?Thanks by charri_714_245 from Orlando, Florida. Mar 3rd 2013 Reply


Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

You are not going to like my answer, but until you resolve your student loans, you will never get approved for an FHA loan. Although it is true that a charged off loan will drop off of your credit report in 7 years (from the date of last activity), student loans never go away. The only two ways to get rid of student loans is to either pay it off or die (they won't come after you once you're dead). Student loans will dog you until paid. My advice is to begin working with them to come to a payment plan. Remember, since Student loans are not dischargeable, it is likely that SLMA will just sell the debt to a collection agency who will add a fresh "Student Loan Collection" to your credit report, prolonging the agony. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Mar 3rd 2013
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,243 contributions

You might find someone who can help but my advice is to work on bringing your score up first. You will get a much better loan with a better score. Check out my blog on this site "first steps" it may give you some ideas. I've seen scores improve 50 points in 30 days.while others it takes 4-6 months.

Mar 3rd 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

I can get you anFHA loan with a 560 middle score. You will need to put 10% down unless you have a 580 score, then you can put down 560. We work with people all the time in your situation. There may be some things we can help you with to boost your scores quickly.Call us or email us at 201-962-3555 or Team@BestMortgageOption.com for ano cost no obligation analysis of your situation.Ask for Michelle or Benny We will find the Best Mortgage Option to suit your needs!You can check us out at www.BestMortgageOption.com

Mar 3rd 2013
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Barb Lanis (BarbLanis)
#70 ranked lender in Illinois - 663 contributions

Have you started to pay down or reached a settlement on those student loans that were defaulted on? FHA specifically states that if you are in default on a government debt, such as student loans, that you cannot receive another government backed loan such as FHA or VA.

Mar 3rd 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,970 contributions

With unpaid government loans, taxes, ect - you will be denied on any Government backed loan... FHA, VA, USDA...

Mar 4th 2013
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I just wanted to add that these weren't federal student loans. These were private loans paid directly to me and not the school. Any federal loans that I do have are current.

Mar 4th 2013
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,243 contributions

Technically it may be possible to get a loan but actually finding a lender who will approve it in your situation will be difficult or impossible if you have significant amounts on defaulted debt, collections or charge offs - especially if they are fairly recent. With your income a natural question will be why you are making payments on those debts. Some will depend on how old they are - how long ago they went into default. 6 years is pretty long and may not matter but you need to show the ability to make payments on time and develop some positive credit to offset the old negative.

Mar 4th 2013
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