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What can hold me back from a preapproval on a FHA loan?

I have a credit score of 633. I'm having problems understanding what can hold me back from getting preapproved. I have some accounts in collections totaling $948 miscellaneous and $1435 in medical. I have a credit card paid on time for more than a year and student loans paid on time. Also my phone, utilities and rent are paid on time. I don't hold any car notes or any other loans. I make almost $60000 a year. I don't know if I should be paying these old collections off or not because I get different advice from different sources.

Can someone please help or give me some advice?
  • February 18 - Hammond
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Answers (4)

It's not that lenders are contradicting each other it's that not every lender is the same. Some lenders may be more strict in one area and another lender can be more strict in a different area. Although the guidelines may allow for certain aspects such as low credit scores and collections up to $2000, it doesn't mean the lenders will qualify you. Lenders may be more strict and may require higher standards than the FHA guidelines because they want to avoid risky borrowers. I would advise that you don't give up yet on finding a lender. Keep searching for a lender that can fit your situation. The best thing for you to do is to speak with other knowledgeable lenders to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!
  • February 21
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I know that 640 credit score can give me more options. However, while researching FHA loans, I notice they can go as low as a 580. Why is it a problem finding lenders who offer loans to people with a 630 middle score when the FHA guidelines are showing a requirement of lower?

I have contacted several lenders and they all seem promising saying they can work with lower scores and in the end are trying to boost the score to a 640 before preapproval.

I get a wide array of suggestions as to how to fix the credit, many of them contradicting one another.

I am starting to get discouraged.

I also read that FHA loans can use collections under the amount of $2000 total in the debt to income ratio based at 5% of the collection per month.

Are these lies? Or are lenders being picky?
  • February 19
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I know some lenders are wanting a 640 Middle score but I know of a few that can go lower. As long as you have income and it's steady and the credit score you will be fine. I know of one or 2 lenders that will go to 580 but they require a little more money down. Feel free to contact me with any questions. I'm always around to help in any way possible.
  • February 19
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Talk with a loan officer who specializes in fha loans- if you would like a name we will gladly give you one.
  • February 19
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