How is it possible to get an FHA loan when one person has no credit?
We were pre-approved for an FHA loan for up to $320,000. One of us has great credit and makes 58,000$ a year and the other one makes 55,000$ a year and has no credit. We have more than enough for the down payment - that is not a problem. We were approved through a mortgage broker and were trying to look into other brokers so we would have more options but no one else can pre-approve us because one of us has no credit. If no one else can pre-approve us then how were we approved through the first broker? Does anyone know how this kind of thing is done so we can tell the other brokers how to approve us? Apparently the first pre-approval is valid since we have been approved for a mortgage through them (we were just looking around to see if we could get better rates).
What I meant to say in the last sentence was that we were offered a mortgage through the agency where the broker was able to pre-approve us. I would consider this proof enough that the pre-approval was valid.
- Anonymous1 decade agoFavorite Answer
FHA loans were created to expand housing opportunities for individuals who normally would not qualify. Prior to the housing bubble clients were approved to buy homes with scores below 500. FHA was actually the original subprime guarantor. Very few people know that the entire subprime market was created by private lenders to compete with the governments variation of subprime which is FHA. Once a client is approved for a FHA loan you are given a FHA number. Therefore, if you was approved by the broker this FHA approval number should be on your loan docs. If there is no FHA number you was not approved. Lenders should be able to track your loan application with the original broker by the FHA number. Also, even though FHA does not have income guidelines the "paper" is purchased by investors and the loan will be assigned to several other investors. The banks might be denying you because the broker found a lender that will approve the loan but the other banks have different guidelines. I would continue to work with the broker if you are able to negotiate acceptable terms and rates
- 1 decade ago
Maybe those brokers do not deal with FHA loans that you were looking for because FHA loans allow you to be able to get a loan even with you have no credit. They use things to establish credit such as telephone bill payments, cable bills, or any other utility or rental history. So this should not be an issue. You are using a broker, but maybe you should try a bank or loan officer and ask them if they deal with FHA loans. Make sure they are a direct lender or use a well-known bank. Having no credit, especially is your spouse does, is not a reason to deny a loan, especially with special programs out there like FHA that allow for this sort of thing.
- acermillLv 71 decade ago
You are advised to check thoroughly with the FIRST broker to see if you are actually approved. My guess is that you aren't approved. A pre-approval is not any sort of approval. It is based upon what you TELL the mortgage broker, without the broker doing any verification of the information provided. The other brokers have apparently gone beyond that point and have discovered that one of you simply has NO credit. When the first broker goes through those same hoops, the result will be the same.
The person with no credit will simply NOT be approved, and that applies to EVERYWHERE you apply.
- silvestreLv 44 years ago
For an FHA mortgage you choose a minimum FICO score of six hundred and 620 is maximum appropriate. you would be able to desire to freshen up your credit and get that score up above 620. you don't get a cosigner on a private loan mortgage, you have a co-buyer. till all purchasers will stay interior the homestead, you will no longer get an FHA mortgage.