Credit Analysis
A borrower must
demonstrate an good to excellent repayment history of all debts. In
addition, the borrower must have a minimum credit score of 620 to
qualify for all conforming loans. FHA and VA do not have credit score
requirements.
Also, any
outstanding collection accounts, charge-offs, judgments, and liens must
be paid by closing and have an acceptable reason for the delinquencies
(hardships, medical reasons, etc.).
Repossessions,
foreclosures and bankruptcies must have a minimum of two (preferably
three) years since the discharge of the debt and the borrower must have
re-established excellent credit for a minimum of 12 months (preferably
24 months).
If extenuating
circumstances do not exist for the foreclosure or bankruptcy, the
borrower(s) must have a minimum credit score of 660 (conforming only).
If a person is currently in a Chapter 13
bankruptcy, they may still qualify for a FHA loan provided the court
approves the transaction and the borrower can demonstrate a timely
payment history for at least 12 months.
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