It’s reasonable to think that a borrower’s FICO score is the most important consideration for a mortgage provider. However, the financier also takes into account your debt-to-income relationship, revenue documentation, and length of work.
To get approved for an FHA credit, your history of on-time installments is just as crucial as your FICO ratings. Learn more about how LBC Mortgage can help you get FBA loans.
Many may ask why. The Consumer Financial Security Bureau (CFPB) advises that not all late payments affect mortgage eligibility.
What should a provider do if they discover a candidate has a past of defaulting on rent or mortgage payments?
Rent Money Reported on Tenants’ Credit
The Consumer Financial Security Bureau says a tenant’s rental history can impact their FHA loan eligibility. Rental payment and recovery information is included in credit records by at least one of the three major consumer reporting agencies, and that agency is Experian.
While not all properties submit to Experian, the CFPB does say that “there are also specialized consumer reporting companies that collect information” for renters to use in the screening process.
Keep your payments current for a minimum of a year
It’s recommended to wait at least 12 months of consistently on-time installments before filing for a mortgage.
In this way, you give the provider a reason to grant your mortgage application. It becomes much more difficult for the lender to rationalize accepting the loan if your recent credit history reveals a trend of late or skipped payments.
Strategy Governing FHA Approval of Tenants With a Satisfaction
The FHA changed its single-family loan rules to make it easier for tenants with 12 months of on-time payments to get a mortgage. If you’ve been paying your rent on schedule for the past year, that will count as a favorable renting payment history in the eyes of the Federal Housing Administration.
For this “additional consideration” to be applied, the lender must confirm the borrower has made all rental payments in a timely manner and show via a new sign within the Scorecard that the submittal of the borrower’s good renting payment history has been made.
If a person has good credit, their rental history can help them get a loan. Your renting payment history is an essential starting point when preparing for house financing, though it isn’t the only factor.
Advice for Obtaining a Better FHA Loan Rating
Although FHA loans have a stellar reputation as a helpful resource for first-time homebuyers, candidates can speed up the approval process by taking care of their credit report. For FHA loan approval, the FHA suggests a good credit history.
Whether you’re buying or renewing, it’s wise to have many credit options. The Federal Housing Administration suggests a year of consistent, on-time payments before filing for a credit.
Advice for Getting an FHA Financing
For guidance on your journey, consider the following:
- Analyze Your Credit Records Carefully
Without checking, you have no idea what could be dragging down your credit score. Check your credit for free once a year from the big three credit reporting agencies (Experian, Equifax, and TransUnion) and look for any red flags.
- Rectify Errors
Notify the credit reporting company in writing of any inaccuracies you discover on your report. Send in any supplementary paperwork or proof you may have in order to back up your claim.
- Get in Touch with an Expert
Applicants with credit issues are encouraged by the FHA to seek assistance from a Consumer Credit Counseling service. Talking to a credit advisor can get you back on track financially.
- Bankruptcy / Foreclosure
FHA credit may be available even if you’ve defaulted or gone bankrupt. Build up a solid payment record, get your credit back on track, and fulfill the other stipulations set forth by the FHA.
Credit history is one of the biggest factors in FHA loan eligibility. Home lending requires 3.5 percent down if your credit score is 580 or better. FHA-approved lenders will not overlook your credit past, and you shouldn’t either.
