Your FHA lender will review your past credit performance while underwriting your loan. A good track record of timely payments will likely make you eligible for an FHA loan. The following list includes items that can negatively affect your loan eligibility:
-No Credit History
If you don’t have an established credit history or don’t use traditional credit, your lender must obtain a non-traditional merged credit report or develop a credit history from other means.
Bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage. For Chapter 7 bankruptcy, at least two years must have elapsed and the borrower has either re-established good credit or chosen not to incur new credit obligations.
It’s best to turn in your FHA loan application when you have a solid 12 months of on-time payments for all financial obligations.
Past foreclosures are not necessarily a roadblock to a new FHA home loan, but it depends on the circumstances.
-Collections, Judgements, and Federal Debt
In general, FHA loan rules require the lender to determine that judgments are resolved or paid off prior to or at closing.