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FHA Guides for Buyers with No Credit History: PLEASE READ!
Recently, I had a well qualified buyer with a great job, no debts, solid savings, and no credit history. This very responsible, hard-working individual had paid off her school loans and car. All that sounds fantastic, doesn't it? Yet, my buyer client encountered difficulty in obtaining an FHA loan, something which surfaced "in the eleventh hour" prior to settlement. Needless to say, the buyer had to switch lenders to find one willing to take a risk on her loan. This caused considerable stress and frustration to both the buyer and seller. Interest rates increased after the rate lock expired. The seller's new home purchase had to be delayed, too.
Suffice it to say, that there appears to be some room for interpretation by underwriters and mortgage institutions, as I have come to learn.
Please read these FHA guidelines carefully in order to counsel your first-time home buyers early on about having established credit.
The borrower's most recent 2-year credit history will receive the closest scrutiny, whether by an Automated System or an FHA Underwriter. The borrower's overall performance in paying debts as agreed will be evaluated. If the file is approved by AUS, the findings may be utilized as conditions. For manual ... more
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