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Lv 4
? asked in Business & FinancePersonal Finance · 1 decade ago

How hard is it to get a FHA loan? I have poor credit, and am in the process of raising my...?

...credit score.

I am stuck. I don't have documents stating that I have had anything under my name.

My loan officer is asking for:

- Income Verification: two paystubs, two W2's, names and phone numbers for all employers

- Letter of Explanation for borrower situation/profile..include all compensating factors that make you a good borrower

- Letter of Explanation for derogatory credit

- Letter of Explanation for rental history

- 3 months bank statements

- 3 reference letters from creditors/banks: (ie; cell phone provider, car insurance co, electricity co, etc)

Now, I have everything EXCEPT the 3 reference letters.

What exactly is that and what if I don't have anything under my name because it is on a "family plan"

Thanks in advance for your help.

9 Answers

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  • 1 decade ago
    Favorite Answer

    FHA Loans - Credit Qualifying for FHA Loans

    ...............................................................................

    In addition to your ability to pay for a mortgage (as indicated by your debts and income), FHA will look at your ability to repay as indicated by your credit report. Your willingness will be judged by your credit report records -- that is, how well you've paid your loans and other debts in the past.

    If you are unsure what your credit report is like, you may want to begin by getting a free credit report that you can view immediately online by clicking >> Here.

    To help you understand why credit is important and why FHA will look at your credit, please try to understand the following:

    Perfect credit is what you are supposed to have.

    Whenever you borrower money (credit cards, auto loans, student loans, etc.) you are making a commitment to that creditor to pay them back on the terms mutually agreed upon. If you are late making the payment then you broke the commitment and the lender can indicate this on your credit report.

    The lender does not know why you are late, they just know that you broke the commitment agreed upon. They are not responsible on helping you manage your bills and debt, as they simply make and offer and the borrower accepts the terms.

    This is why your credit is very important in qualifying for a home loan. Although you are supposed to have perfect credit, FHA will allow for minor past credit issues, as long as there is a "reasonable" reason why there was an issue.

    FHA will look mostly at the last two years of your credit history. If there are some credit issues, we may be able to overcome them with sufficient explanations and supporting documents of why the issues occurred. Following is some the the reasons FHA will accept:

    Lost of Job

    Job Transfer

    Serious Illness

    As long as it seems to make sense, and it is not just because you did not make the payment or because you had too much other debt.

    You should not rule yourself out of qualifying for FHA loan to buy a home or refinance your existing mortgage because of credit issues until a mortgage professional has reviewed your credit.

    There are some credit issues that you must allow for a certain time (seasoning) to past before you can qualify for a FHA loan. They are follows:

    Two years from the date of discharge for a Bankruptcy

    Three years from the date of Foreclosure

    Also FHA would typically require that any outstanding collection accounts, judgments, charge off's be paid off in full before closing your loan but not necessarily before "approving" your loan.

    If you have a "Federal Tax Lien" that is in a repayment agreement, you do not have to pay it off in full but you must be able to qualify with the monthly payment of the repayment agreement. "State Tax Liens" typically must be paid in full prior to closing your FHA loan.

    Another advantage of FHA loans is that FHA does not require a credit scoring item called a FICO (Fair Issac Company) score. So if you have no credit at all you may still qualify for a FHA loan. If you have some credit you will typically need a minimum middle credit score of 580 to qualify for a FHA loan. If you are not sure what your credit score is, you can click here to order your credit scores online. This allows more home buyers to qualify to purchase or refinance a home.

    When you apply to get pre-qualified for a FHA home loan, we will order a credit report for you. The credit report will show your record of payments on loans, charge cards and other similar debts. If you have never had a loan or a charge card, you can show that you have a good record of payment on your utility bills and rent payments.

  • 5 years ago

    Today the lenders have started offering nearly all varieties of loans for people with poor credit record.They are also introducing many new loan products meant for this group. Now people with poor credit can get the same choices as those with the good or mediocre credit. Today you can use bad credit personal loans for many purposes like car purchase, vacation or even debt consolidation. But if you have some assets to offer as collateral, your chances brighten. The primary reason why people with poor credit history do not get loans is because the lenders are scared that the borrowers will default again. But if you can offer collateral, your lender is secure in the knowledge that his money is in safe hands. You have to try and meet the repayment schedule, failing which you lose the asset. If you do not have collateral, go for an unsecured personal loan, which is rare for people with bad credit. It is necessary that your credit record should be clean for an unsecured personal loan. However, some lenders can accept your case due to inevitable reasons.

  • Anonymous
    1 decade ago

    The Federal Housing Administration (FHA) runs several programs to promote home ownership. In most cases, FHA loans are mortgages obtained with the help of the FHA. With a small down payment, buyers can purchase a home. FHA loans make it easier for people to qualify for a mortgage, but they’re not for everybody.

    What is an FHA Loan?

    An FHA loan is a loan insured against default by the FHA. In other words, the FHA guarantees that a lender won’t have to write off a loan if the borrower defaults – the FHA will pay. Because of this guarantee, lenders are willing to make large mortgage loans.

    Who Can Get an FHA Loan?

    Almost anybody can get an FHA loan. There are no income limits – like you may find with first time home buyer programs. However, there are limits on how much you can borrow. In general, you’re limited to relatively small mortgage loans relative to home prices in your area. To find the limits in your region, visit HUD’s Website.

    To qualify for an FHA loan, you’ll need to have reasonable debt to income ratios. In general, you have to be better than 29/41. In addition, you have to have decent credit. You don’t need wonderful credit to get an FHA loan; it just needs to be decent.

    Why are FHA Loans so Great?

    FHA loans are not for everybody. Nevertheless, they are a great help to some borrowers. FHA loans allow people to buy a home with a down payment as small as 3%. Other loans might not allow such a low down payment.

    FHA loans offer a few other bells and whistles:

    * Easier to use gifts for down payment and closing costs

    * No prepayment penalty (a big plus for subprime borrowers)

    * An FHA loan may be assumable

    * Possible leniency during financial hard times

    How do FHA Loans Work?

    The FHA promises to pay lenders if a borrower defaults on an FHA loan. To fund this obligation, the FHA charges borrowers a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium (MIP) of 1.5%. They also pay a small ongoing fee with each monthly payment.

    If a borrower defaults on an FHA loan, the FHA uses collected insurance premiums to pay off the mortgage.

    Why Not Use an FHA Loan?

    You may find that FHA loans are not for you. An FHA loan may not offer enough money if you need a large mortgage. In addition, the upfront mortgage insurance premium (and ongoing premiums) can cost more than private mortgage insurance.

    * See FHA Loan Pitfalls

    In many cases, you can still buy a house with a very little down using a standard loan (not an FHA loan). In particular, home buyers with good credit can find competitive offers that beat FHA loans.

    As always, you should compare offers for FHA loans against other offers.

    (read more at the following link)

  • ?
    Lv 7
    1 decade ago

    The FHA is probably more lenient with making home loans to first time buyers than regular banks or mortgage companies. Your loan officer should have chosen the loan that you're most likely to get approval on, so he/she probably thinks you're qualified.

    The letters will just demonstrate that you pay your bills on time. You can just phone each company and ask for someone in the reimbursement or billing department.

    Also, speak to your loan officer. Just let him/her know that your cell phone, car insurance, etc. are under your parents' name. If you pay your own electric bill, phone that company and ask for a letter stating your record of making payments. You should be able to show from your bank statements that you were the one who made those payments, even if the account is in someone else's name.

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  • Anonymous
    1 decade ago

    I have had perfect credit for about 6 years, and I could buy a house if I wanted to. But I won't.. not yet.

    Grow up a little, get your credit in order before you even look at a house. You are a foreclosure waiting to happen.

    The fact that you have had NOTHING in your name will prevent you from getting a house. You should have had things in your name at least 5-7 years ago and in a decently good standing. You mean to tell me you have never had a credit card? A car? An electric bill? Rent? NOTHING??? You'll never get into a house unti you build up your credit.

    You have two options.. rent a townhome (if they'll even let you rent one with no credit) or marry rich.

    Stick with a nice rented townhome. No maintenance, minimal stress.. time to save up and get financially stable. Chances are you still have stuff to pay off. That's not going to make the mortgage payment AND mortgage insurance (since you have less than perfect credit) any easier.

  • Anonymous
    7 years ago

    I was on the same situation and this site helped me HTTP://HELP.CREDIT-SOLUTIONS.INFO

    RE How hard is it to get a FHA loan? I have poor credit, and am in the process of raising my...?

    ...credit score.

    I am stuck. I don't have documents stating that I have had anything under my name.

    My loan officer is asking for:

    - Income Verification: two paystubs, two W2's, names and phone numbers for all employers

    - Letter of Explanation for borrower situation/profile..include all compensating factors that make you a good borrower

    - Letter of Explanation for derogatory credit

    - Letter of Explanation for rental history

    - 3 months bank statements

    - 3 reference letters from creditors/banks: (ie; cell phone provider, car insurance co, electricity co, etc)

    Now, I have everything EXCEPT the 3 reference letters.

    What exactly is that and what if I don't have anything under my name because it is on a "family plan"

    Thanks in advance for your help.

  • 1 decade ago

    I am Mrs Vanilla Pam,currently living in New florida,USA.I am a widow at the moment with three kids and i was stuck in a financial situation by may 2009 and i needed to refinance and pay my bills.I tried seeking loans from various loan firms both private and corporate but never with success,and most banks declined my credit.But as God would have it,i was introduced to a man of God a private loan lender by name Mr Lacus Robinson who gave me a loan of $75,000USD and today am a business owner and my kids are doing well at the moment.So dear,if you must contact any firm with reference to securing a loan with low interest rate of 3% and better repayment plans and schedule,please contact Mr Lacus Robinson.He doesn’t know that am doing this but am so happy now and i decided to let people know more about him and also i want God to bless him more.You can contact him through his email at lacuslendingfirm@gmail.com

  • 1 decade ago

    hi

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  • Anonymous
    7 years ago

    This site can solve your problem very fast: http://www.credit-compare.net/

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