Over the past several years, FHA loans in Minnesota have become the most popular program for both home purchase and refinance loans. I’ve compiled an FAQ of typical questions regarding Minnesota FHA loans.
What is the minimum credit score for FHA loans?
The minimum credit score for FHA loans in Minnesota is as low as 500, depending upon the investor, however rates and down payments with a credit score under 640 tend to be higher.
Can I get an FHA loan with no credit in Minnesota?
There are 2 basic ways to get an FHA loan if you have no credit. If you have built credit through other means, we can create a non-traditional credit report provided that you have at least 3 “tradelines” that you have been paying over the last 12 months. At least one of the tradelines must be rent on a lease in which you are named. The other credit references can come from items such as cell phone, utility bills, monthly insurance bills, etc.
Alternatively, you might qualify for an FHA loan with no non-traditional credit but the guidelines become even more restrictive.
What is the minimum credit score for Minnesota First Time Home Buyers?
In order to qualify for Minnesota Housing Finance Agency (MHFA) funds using FHA financing you will need a minimum credit score of 620. However, in some cases, if you have no credit score, MHFA allows us to build a “non-traditional” credit report using alternative credit references.
How long after a foreclosure do I qualify for an FHA loan?
The present guideline from FHA states that a minimum of 3 years must have past since the date of the foreclosure as stated on your credit report. Good credit must have been re-established over that time as well.
How long after a bankruptcy can I get an FHA loan?
For a chapter 7 bankruptcy in Minnesota, you will need a minimum of 2 years since the date of the bankruptcy discharge. If you had a chapter 13 bankruptcy, just 1 year needs to have past since the discharge. In some cases you might also qualify for an FHA loan while still in a chapter 13 if at least 12 months have past since entering the program and if the bankruptcy judge allows it.
What is the maximum income guidelines for an FHA loan?
There is no maximum income guideline for FHA loans.
Do I have to be a first time buyer to qualify for an FHA loan?
If you are looking for a Minnesota FHA loan, remember that you do not have to be a first-time homebuyer to take advantage of the many benefits. Many borrowers today lack the down payment sufficient to qualify for a conventional loan and therefore are opting for FHA financing even though they have owned homes in the past.
How long do I need to be on my job before I qualify?
FHA has perhaps the most liberal of guidelines for length of employment. While the general guideline is that you must have been on your job for at least 6 months, there are many exceptions to this rule. If you are concerned about the length of your employment history please call me to discuss your individual scenario.
How long before I can get rid of mortgage insurance on an FHA loan?
You must make timely monthly payments for a minimum of 60 months (5 years) before you can apply to remove the monthly mortgage insurance premium. You must also establish that you have at least 22% equity in the property based on the original appraised value. The Up-Front Mortgage Insurance Premium (UFMIP) does not come off of the loan unless you pay it off (i.e. through a refinance or sale of your home).
Are FHA loans in Minnesota assumable?
This is one of the unique features of an FHA loan. Your FHA loan is assumable which means that when you go to sell your property, the new buyer can assume the balance of your loan, provided that they qualify. This can be a great sales feature when you go to sell the home if your interest rate is better than the going rate of the day!
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