While the FHA program allows potential homebuyers to secure a loan even with a less-than-perfect credit rating, recent changes in policies have changed the credit requirements and you will need to show a positive credit score over the last two years.
While the government guarantee on these loans does make it easier to qualify, applicants are still required to have a minimum FICO score of 580 in order to qualify for the 3.5% down payment. However, if your score is lower than that, you may still be able to qualify for the loan if you are able do a larger down payment.
Building Better Credit
Since the government is backing the loan in case the borrower defaults on it, lenders are usually more willing to look at your overall credit situation rather than just focusing on some glaring problems. That does not, however, mean you can neglect your credit score. Everything from your payment history to foreclosures and bankruptcies will have a big impact on your credit score. While the FHA loan process gives the lenders reason to look at any extenuating circumstances that may have caused you to miss payments, they will still want to see a positive history.
At LoanProConnect we can help you understand the different credit requirements for an FHA loan so you can make the best decision for your home loan. Contact us today to learn more.