Tighter Rules To Qualify For An FHA Mortgage

Whether you’re buying your first home or you’re tenth, unless you’re paying cash you’ll need to line up a mortgage.  One of your mortgage options is an FHA loan, but if you’ve got a checkered credit history you’ll want to know about a few changes to the rules:

1. Any foreclosure on your record must be at least three years old.  That means that if you’re looking to purchase in home in 2013, your foreclosure must have happened in 2010 or earlier.
2. Any bankruptcy on your credit record must have been discharged at least 2 years ago.
3. You must make a down payment of at least 3.5% or more. Be prepared to pay more if you’ve had a recent bankruptcy or foreclosure.
4. You must have a credit score of 640 or higher.
5. You must demonstrate at least 12 months of on-time bill payment.
6. You must have a very low debt-to-income ratio.

As with anything, all rules are made to be bent if not broken. With that in mind, if you find yourself lacking in one of these qualifications, you’ll want to make up for it in another.  Paying your bills on-time, reducing your debt-to-income ratio and saving for a large down payment are within your power.  Also keep in mind that different lenders may have additional borrower requirements.