How does an fha loan work
How We Work With Bad Credit
FHA mortgages have always been the alternative to risky subprime mortgages. The underwriting guidelines for FHA mortgages are very flexible and as a result when your personal loan officer takes your applications and tries to approve it they will receive a response from their underwriting system on if you are Approved, Approved with Conditions, or Not approved.
Also no matter what your score you can get the same rate as someone with excellent credit who also applies for an FHA loan which means no matter what your credit grade you will be saving money.
Being approved with conditions can be as simple as making one of your credit cards current, or maybe a line of credit is still reporting after being closed. There can be a multitude of reasons and the situation is different for everyone. This is essentially your path to homeownership. Your loan officer will inform you on the conditions and it is up to you to meet them.
FHA has released guidelines on credit scores – with a 580 score considered to the
be the minimum for approval without conditions. You can still get approved for a mortgage below 580 down to a 500 score but you would need to put a much greater downpayment and possibly resolve any issues around federal debt such as student loans that need to be made current before you can enjoy any FHA financing.
It is also important to note that many banks often have their own specific guidelines for FHA products. We try to match you with the best lenders that can help you.
In the lending industry anything below 640 is considered adverse or bad credit. Since we work with FHA loan officers which have access to these products that lend below 640 we are showing you a path to homeownership even if you have bad credit. There are limits on how bad your credit can be – for anyone below a 500 score there are no options until you can improve your credit.
For more information on how you best get a mortgage with bad credit ask your personal FHA loan officer about your path to homeownership.Source: www.fhamortgage.org