FHA Collection Accounts

FHA Collection Accounts

FHA starting in April 2012 FHA has changed it's collection account guidelines. Going forward all collection accounts within the last two years must be paid off.

All collection accounts totaling over $1,000.00 must be paid off. Collection accounts that total less than $1,000.00 and are over two years old may not have to be paid off.

If you have collection accounts that are not paid off - FHA allows you to set up a payment arrangement to qualify for a loan. By setting up a payment arrangement FHA will allow you to make three on time monthly payments to qualify for a FHA loan.

Credit Score

FHA allows a borrower with a credit score of 580 to buy a home with only a 3.5% down payment. FHA guidelines allows a borrower with a minimum credit score of 580 to buy a home using their own funds for a down payment or the down payment funds can be a gift from a family member. If reserves are required must be the borrowers own funds.

FHA guidelines allows a home buyer with a minimum credit score above 580 up to a 6% seller concessions. The seller concessions must be written into the sales contract.

2016 FHA guidelines requires a minimum credit score of 500 for all loans.

Home buyers with a credit score below 580 are required to make a 10% down payment. The down payment funds can belong to the borrower or can be a gift from a family member. Up to 6% seller concessions are allowed. If reserves are required must be the borrowers own funds.

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