Florida FHA Home Loans
We have received quite a few emails and phone calls recently
regarding FHA loans and credit scores of less than640. While We still have access to one Florida FHAMortgage Lender whose guidelines allow for scores as low as 580 for maximum
financing (3.5% down on a purchase, it has
been getting more and more difficult to get these loans approved. A few things
that may be required are rental history (cancelled rent checks for 12 months),
debt ratios less than 43%, no negative credit after a major derogatory event
(bankruptcy, foreclosure, auto loans repossession), and in some cases collection
accounts will need to be paid in full. Also, the
Florida FHA Mortgage Lender will want to see at least 3 open, active, good
credit accounts that have been active for 12+ months. In some cases they will
allow alternative credit accounts (12 months’ pay history on things such as
utilities, auto insurance, etc.)
- · Credit Score of 580 and above – eligible for maximum financing (96.5% for purchases and 97.75% for refinances)
- · Credit Score of 500 to 579 – limited to 90% financing
- · Credit Score Below 500 – not eligible for FHA insured mortgage financing
FHA mortgages have rose in popularity over the last few
years. Some attribute the increased demand to the void that the subprime market
left. The increased demand for FHA mortgages in Florida may also be due to the
lower credit score requirements compared to its Conforming (or Conventional)
counterpart.
Let’s look at the Credit Score requirements for a few
different FHA mortgage programs in Florida. To check what options, you have
available for an FHA loan in Florida head over to the FHA Rate Quote Request
page and fill out the simple form (no social security number required). Make
sure you keep in mind that FHA sets the minimum standard, and individual Florida
FHA Mortgage Lenders are free to impose more strict guidelines, which most do
in regards to credit scores.
Borrowers with non-traditional or insufficient credit – may
be eligible for maximum financing if they can document 12 months of
satisfactory credit history including no history of late payments on rental
payments, no more than one 30 day late on payments to other creditors, and no
collections or judgments filed in the past 12 months
So that is the minimum standard that HUD has set for Florida
FHA mortgages, both purchases and refinances. Now, lets look at what Florida
FHA Mortgage Lenders in the real world have set for FHA credit score
requirements.
Most main stream Florida FHA Mortgage Lenders have imposed
minimum credit score requirements for FHA Mortgages in Florida at 640, with a
few going slightly lower with a 620 minimum score.
Some smaller Florida FHA Mortgage Lenders are offering FHA
Mortgages down to a 560 credit score. However, a credit score of 560 to 579
will cap a borrower at 90% financing. Also, most Florida FHA Mortgage Lenders
that are offering Florida FHA home loans for credit scores below 640/620 will
impose some additional requirements including, but not limited to, documenting
12 months mortgage/rent payments via cancelled rent checks, setting a maximum
acceptable payment shock (your existing rent/mortgage payment compared to the
new housing payment), setting a minimum amount of assets needed after closing
(commonly referred to as reserves), etc.
There are exceptions to the rules, and new Florida FHA
Mortgage Lenders are entering the market here and there, so use this as a guide
to help you get started when considering an FHA loan. If you are concerned
about your score and your ability to qualify for an Florida FHA mortgage visit FHAmortgagePrograms.com
FHA Links of interest include
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