Qualify

There has some been some changes to FHA Home Loan and requirements for borrowers that may not have  established a credit history or do not have a credit score to qualify for regular conventional home financing. In the past, The Federal Housing Administration (FHA) would allow borrowers who did not have credit or even a  score to use other types of trade-lines to build a case and qualify for a FHA home loan. These trade-lines can includes: rent, phone bills, cell phone bills, cable and utility bills, payments to local rent-to-own stores, etc. These changes have had an impact on the ability for buyers to obtain FHA home loan for the purchase of a new home, who lack a “traditional” credit history.

The update was really designed to help better determine a borrower’s bill paying habits. So, now a borrower, who lacks established credit will now need to show a total of three tradeline credit references. One of the credit references will need tp show a 12 month on-time record and must be one of the following:

* Rent payments
* Utility company payments

Two forms of credit can come from this group:

* Insurance (car, renters, etc)
* Child care
* School tuition
* Retail stores
* Internet/Cell phone
* Auto lease
* Personal loan

These additional trade-lines should have been paid on time and to be current for at least 12 months or longer.  (or you will need one heck of a good excuse)

Those Borrowers who have not established credit, don’t pay rent and don’t have any other bills MAY still be able to qualify for a FHA Home Loan, but they will be need to prove at least 2 months of mortgage payments reserves in a an account before and after closing.

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