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FHA LOANS WITH LOW CREDIT SCORES
Can we apply together for fha loan ? His credit is not too good, although we just paid off his car loan and hoping that will boost his credit any day now. I’ve been in ssi for ten years.
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1 Reply
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Yes, you can apply together for an FHA loan even with less-than-stellar credit, but there are a few things to keep in mind:
Key Takeaways:
Credit Scores: Credit scores are not typically a problem regarding FHA loans. The minimum credit score requirement is usually 580 for the lowest down payment (3.5%). Some lenders may approve a loan with as low as 500 if you make a larger down payment (10%). If one of the applicants has lower scores than the other person applying, they will use the lower score.
Debt-to-Income Ratio: Both incomes will be used to calculate your DTI ratio, which is considered heavily during an FHA underwrite. The debt-to-income ratio compares your monthly debt obligations against gross monthly income; this guideline allows lenders up to 43-50%, depending on their overlay.
Income Sources: SSI can be used as long as it is documented properly. They must treat SSI no differently from any other income stream so long as it is stable and reliable.
Building Credit: Paying off the car loan could boost his score, but it might take time to reflect on his credit report. Continue keeping an eye on his numbers because even slight improvements can significantly impact the terms of your loan.
Next Steps:
Check Credit Scores: Pull your reports and ensure everything listed is accurate before moving forward.
Talk To A Lender: Speak with someone who specializes in these types of mortgages so they can offer advice specific to your situation based on the facts presented here.
Consider Compensating Factors: When there are credit issues, higher down payments or reserves help balance them out.