If I were given the opportunity to clear up ALL of my debt(which includes a nasty charge off from five years ago), how soon would I qualify for an FHA loan? I'd appreciate only knowledgable answers, thanks!
2007-04-30 02:35:46 · 2 answers · asked by Jean Low 2 in Business & Finance ➔ Credit
Qualification for an FHA-insured loan generally involves demonstrating the ability to pay the loan back.
It's a lot easier to get a home loan than a car loan - mortgage loans tend to be more solidly equal to the equity (the home) than car loans.
That said, with one chargeoff five years ago, I'd suspect you're currently qualified for an FHA loan if your income to outgo ratio isn't out of whack and your income is sufficient to pay the mortgage note.
2007-04-30 02:42:23 · answer #1 · answered by Stuart 7 · 0⤊ 0⤋
We purchased a house a year ago with bad credit. There is technically no credit score requirement for an FHA loan. FHA has their guidelines for debt ratios that need met. I can't remember what they are. 28% and 48% sound right but they might be off a little. The only other requirement is that you have no unpaid judgements or collections and that you are current on all outstanding bills for the last 12 months. The collections don't need to be 12 months old, just paid off by the time of closing.
A lot of lenders put a few additional requirements on the loan. Specifically, most have their own credit score limit of 500-540 that you must be above to qualify with them, but not all.
I would recommend a 15 year fixed loan with a payment that is no more than 25% of your take home pay and no other debt. Anything else will leave you house poor and could put you in a difficult situation. DO NOT get into an interest only or balloon payments. They will kill you in the future and the chances that you will lose your home are much greater.
2007-04-30 09:44:13 · answer #2 · answered by buckeyefrank100 1 · 0⤊ 0⤋