FHA, or Federal Housing Administration, insures this home mortgage loan. The downpayment is less than 3 %, but even 100 % financing is possible. There is no minimum credit score or FICO requirements. The closing costs of this home mortgage loan are regulated by FHA.
1. How To Improve The Credit Score?
When you decide to apply for the home mortgage loan with bad credit, it requires planning. You should prepare for this important action by thinking, how to improve the credit score. The credit score is the single most important piece of information, which the lenders look at. Try to think like a lender.
First, ask your credit information from the credit agencies, Equifax, Experian and TransUnion and check that the information is right. The best thing to improve credit score is to pay the bills on time. If your payment is more than 30 days late, the credit agencies will get that information, which will stay at their records for 7 years.
2. The Credit Cards Play An Important Role.
Naturally, if you have paid all bills on time, there is no problem. But, when you think your financial information with the eyes of the lender, all debts have similar signs. Try to avoid growing your credit card debt more than 50 % of the credit limit. And do not apply for new consumer loans or credit cards, because every application will reduce your credit score by 12 points.
3. Try To Keep The Same Employer.
If you have a bad credit information and you work part time or have changed employer several times, these all are bad signs for the lenders. The loss of a job makes it impossible to get an FHA loan. If a person is suffering about a serious illness, it makes the acceptance difficult.
In these special cases the lenders doubt the ability of the borrower to pay the loan. But if a person has a full time job and his incomes are sufficient to pay the FHA loan, he has good chances to become accepted.
4. The Bankruptcies.
Many people think, that because they are suffering bankruptcies, they cannot apply for the FHA bad credit home mortgage loan. The bankruptcy does not make a person ineligible, but the bankruptcy must be older than two years. If the foreclosure occurred more than three years ago, the person can apply for the bad credit FHA mortgage loan.
5. Usual Loans.
A person can get 30 year fixed rate mortgage or an adjustable rate mortgage, if his financial plans allow that. It is importnat to note that FHA is an equal opportunity lender and follows the fair lending practises, so all loan types are available.