Interesting article on new FHA loan rules (proposed)

[doni49]

http://www.bankrate.com/finance/mortgages/fha-changes-home-mortgage-rules-1.aspx

[Ugh07]

The changes in monthly MIP and Upfront MIP are in effect right now. The net result is a higher monthly payment but a smaller down payment. The addition of credit score minimums is somewhat meaningless sincemost lenders wont go below a 620 anyway. Almost none go below 580.

[backtoschool]

The changes in monthly MIP and Upfront MIP are in effect right now. The net result is a higher monthly payment but a smaller down payment. The addition of credit score minimums is somewhat meaningless sincemost lenders wont go below a 620 anyway. Almost none go below 580.

It will be interesting to see how the new manual underwriting flexibility plays out and whether it ends up helping or hurting people who filed bk.

Very few lenders will go below 620, and most expect to see some sort of positive credit history.

[LSUTiger32]

Very few lenders will go below 620, and most expect to see some sort of positive credit history.

I could be wrong, but I thought that they could not deny you for an FHA loan if you are within FHA guidelines. FHA guidelines require "positive credit history since BK or NO credit used since bankruptcy." They also allow scores to I believe 580. I thought that was the point of FHA loans. Regardless, you can find a lender if you fall within the guidelines.

[Ugh07]

I could be wrong, but I thought that they could not deny you for an FHA loan if you are within FHA guidelines..

In essence FHA guidelines are minimum lending standards for an FHA insurable loan. Lenders are allowed to have "overlays" on top of FHA guidelines. Most if not all lenders do not follow FHA guidelines and have tougher overlays. Most lenders I work with require a 640 score.

[backtoschool]

In essence FHA guidelines are minimum lending standards for an FHA insurable loan. Lenders are allowed to have "overlays" on top of FHA guidelines. Most if not all lenders do not follow FHA guidelines and have tougher overlays. Most lenders I work with require a 640 score.

I totally agree with Ugh07. I talked with several brokers, wanting to understand what I needed to do to prepare for buying a house, and they told me that scores in the 620-640 range with a minimum of 3 current, active, positive trade lines were the minimum requirements most lenders will accept. Most lenders want to see 5 positive, current tradelines, a 640 mid score, and no unpaid active collection accounts. The governmental guidelines have little to do with what lenders want to accept. They want to see a positive credit history, especially in cases where there have been prior bankruptcies and foreclosures.

[LSUTiger32]

Bottom line, if you meet the guidelines you will get a loan. Look for another lender, because they would be stupid not to do a loan that met the requirements. They are insured (the point of an FHA loan) and they don't exactly have people beating down their doors for loans right now. Problem is, none of us meet the guidelines due to our BK being fresh. When I spoke to someone a few months back she told me she could do the loan that day if it weren't for the BK on my credit report. Everything else was perfect.

[chrisdfw]

Most lenders want to see 5 positive, current tradelines, a 640 mid score, and no unpaid active collection accounts. .

Damn, I have not borrowed a dime since bk, have acredit scores around 650-680, BUT
I can't think of 5 things I want enough to borrow money!

[backtoschool]

Damn, I have not borrowed a dime since bk, have acredit scores around 650-680, BUT
I can't think of 5 things I want enough to borrow money!

Having positive tradelines does not mean you are "borrowing" money. You can have credit cards that you pay in full every month, a secured loan, etc. There are many ways to have positive tradelines without being in debt.

[Stilltheone]

Thanks for sharing OP!! Very interesting to read!

[LSUTiger32]

Me either! You'll be just fine with those scores.

[Ugh07]

Bottom line, if you meet the guidelines you will get a loan. Look for another lender, because they would be stupid not to do a loan that met the requirements. They are insured (the point of an FHA loan) and they don't exactly have people beating down their doors for loans right now..

It's more a function of there not being appetite in the secondary market for FHA loans under a certain credit score right now. Just meeting the guidelines will not guarantee you a loan. FHA insurance does not cover all loses and even if it did there are no intermediaries packaging FHA loans under certain credit scores anyway. Investors are requiring a perceived higher quality loan.

[LSUTiger32]

It's more a function of there not being appetite in the secondary market for FHA loans under a certain credit score right now. Just meeting the guidelines will not guarantee you a loan. FHA insurance does not cover all loses and even if it did there are no intermediaries packaging FHA loans under certain credit scores anyway. Investors are requiring a perceived higher quality loan.

Once again it might not be easy but there are places to go to get these loans. Being honest.....yes, it is harder now for anyone to get a mortgage even those with spotless credit. However, that is not to say that it can't be done. It just takes more time and patience now.