FHA will analyze a borrower's credit history to determine the approval status of a mortgage loan. They will look at a borrower's credit history, late payments, bankruptcy, collections, judgements, federal debts, and foreclosures.
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Equal Housing Lender

FHA Credit Issues

FHA Loan Borrowers and Their Credit History

HUD will analyze a borrower's credit history in determining the FHA loan for approval. A borrower who has made timely payments serves as a guide and demonstrates their willingness to repay future credit obligations. On the opposite side, a borrower who reflects continuous slow payments, judgments and delinquent accounts is not a good candidate for FHA loan approval. Below is a list of items concerning the borrower's credit.

Late Payments

When the underwriter analyzes the borrower's credit, it is the overall pattern of credit behavior that must be reviewed, rather than isolated cases of slow payments. A period of financial difficulty does not disqualify the borrower if a good payment pattern has been maintained since then.

No Credit History

In the event a borrower does not have any credit lines (2 needed) on their credit report, the FHA will allow substitute forms of credit such as utility payment records, rental payments, car insurance payments, etc.

Chapter 7 Bankruptcy

The FHA guidelines state that a minimum of two years must elapse since the discharge date of the borrower and / or spouse's Chapter 7 bankruptcy, not the filing date. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

Chapter 13 Bankruptcy

The FHA guidelines state that they will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the court have been satisfactorily made and verified for a period of one year. In addition, the court trustee will need to give written approval to proceed. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

Collections, Judgements and Federal Debts

The HUD guidelines state that if a collection is minor in nature, it usually does not need to be paid off as a condition for loan approval. Judgments must be paid in full prior to closing. A borrower is not eligible for the loan if they are delinquent on any federal debt. This can include tax liens, student loans, etc. Payment arrangements that would bring the borrower up to date may be considered for loan approval.


A borrower whose previous residence or other real property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years is generally not eligible for an FHA insured mortgage. However, if the foreclosure of the borrower's main residence was the result of extenuating circumstances beyond the borrower's control, and they have since established good credit, an exception may be granted. This does not include the inability to sell a home when transferring from one area to another.

First time home buyers purchasing a home with an FHA loan or going through a HUD-approved charitable agency can use their 2009 First Time Homebuyer's Tax Credit to make their downpayment.
In spite of the initial confusion, FHA rules are clear now--bridge loans are permitted, but the FHA's required down payment must still come from the borrower.
Under RESPA, lenders must provide specific information about the expenses borrowers must pay on their FHA mortgages, conventional loans or refinancing deals.
If you had Upfront Mortgage Insurance on FHA mortgages signed on or after December 8, 2004, you would not be entitled to a refund from the FHA on your Upfront Mortgage Insurance.
Did you know you can raise the value of your property AND lower your utility bills at the same time? Apply for an FHA Energy Efficient Mortgage or FHA EEM, which gives you finds to upgrade the property to make it more energy efficient.

FHALoan is a private corporation, is not a government agency, and does not make loans.