In summary, as your income to debt ratios go up, so do the requirements.
FHA does not want borrowers “living on the edge,” unable to pay maintenance costs for the home or other surprise costs of living.
Please contact me to discuss your specific lending needs, and I will give you the calculations regarding your debt to income numbers.
It is often, simply stated, that FHA will make loans with no credit history or with credit scores down to 500.
While this is true, as you read above, there is much more to consider for an FHA Loan Approval, when the credit scores are low.
It is our practice, at Sellens Real Estate Lending, to obtain a tri-merge credit report on all the borrowers, when feasible. This way there is time to address any surprise issues that come up.
The credit report shows it all – the good and the bad, and once received, we can submit the loan to get a pre-approval furnished by the FHA automated underwriter.
Many factors effect your credit scores. An example of this is, if you have a credit line with a maximum amount you can borrow, and you get close to that maximum, your credit score will go down, sometime dramatically.
This is true, even if the credit line is small. Say a $300 limit, and you get close to the $300, or even worse, you exceed the $300 limit. A $50 or $100 payment can change your score in your favor.
At the end of the credit report, you will find phone numbers for each of the credit lines. You can contact them by phone, and explain if there are errors that need to be corrected.
It is best to do all the creditor business in writing. You can offer to pay a credit line down or off, and the creditor needs to write down what they will do for you, if you do something for them.
If you need help understanding your credit report, I will be happy to help.