| FHA mortgage insurance requires a Florida borrower | | | | - Chapter 7 Bankruptcy: Florida FHA mortgage lenders |
| to demonstrate a good repayment history of all | | | | require a minimum of 2 years since the discharge of |
| debts. This history serves as the most useful guide in | | | | the Florida bankruptcy. An explanation of the Florida |
| determining a Florida mortgage applicant’s | | | | bankruptcy will be required. Furthermore, the Florida |
| willingness to repay credit obligations and serves as a | | | | mortgage applicant should have re-established credit |
| model in predicting his/her future actions. | | | | proceeding the bankruptcy with no late payments. |
| When analyzing a Florida mortgage applicant’s | | | | - Chapter 13 Bankruptcy: Florida FHA mortgage |
| credit report, it is important to focus upon the general | | | | lenders will consider a borrower still paying on a |
| pattern of credit behavior rather than isolated | | | | Chapter 13 bankruptcy if the payments to the court |
| unexpected temporary occurrences of late | | | | have been made for a minimum of 1 year in a |
| payments. Often times, Florida mortgage applicants | | | | satisfactory manner (as verified with the courts) and |
| will experience a period of financial difficulty in the past | | | | with the approval of the court trustee. |
| and does not necessarily translate into an | | | | - Federal Debts: A mortgage applicant is not eligible for |
| unacceptable risk. Reasonable past explanations of | | | | a FHA loan if he/she is delinquent or in default on any |
| the derogatory credit and evidence of offsetting | | | | federal debt (such as a HUD or VA mortgage, student |
| factors (such as a new job or promotion with greater | | | | loans, SBA loans or a tax lien against his/her |
| stability and pay, for example) will be necessary. All | | | | property). Florida mortgage applicants can become |
| recent derogatory credit within the past 2 years must | | | | eligible by bringing any delinquent accounts current, |
| be explained, in writing, by the borrower. | | | | making satisfactory repayment arrangements with the |
| The following is a brief synopsis of the credit | | | | creditor (generally a 3 month minimum history will be |
| underwriting guidelines for FHA mortgage loans: | | | | required), or paying the account in full. |
| - Lack of credit history: If a Florida mortgage applicant | | | | - Judgments: Judgments must be paid or have 12 |
| does not have a minimum of 3 trade lines on their | | | | months of arranged payment history |
| credit report, alternative forms of credit may be | | | | - Collection Accounts: Collections do not need to be |
| used. This would include items such as 12 months | | | | paid (LOX) needed |
| canceled rent checks, or verification of rent from a | | | | - Foreclosure: A Florida mortgage applicant who has |
| management company, letter from an electric, cell | | | | had a property foreclosed upon, or who has given a |
| phone, cable, auto insurance payment history or utility | | | | deed-in-lieu of foreclosure within the previous 3 years, |
| bills, etc, providing proof of a 12 month on time | | | | is generally not eligible for a Florida FHA mortgage |
| payment history. | | | | loan. However, if it was the result of extenuating |
| - Included credit obligations: Any installment loans such | | | | circumstances beyond the borrower's control (such as |
| as student loans, car loans, or other debts with less | | | | the death of a spouse, loss of employment, or serious |
| than 10 months remaining does not need to be | | | | long-term illness, etc.) and the borrower has since |
| included when qualifying for a Florida FHA mortgage | | | | re-established good credit, an exception may be |
| loan. However, consideration is given to a large debt | | | | granted. However, extenuating circumstances do not |
| of over $100 a month, regardless of the number of | | | | include the inability to sell a house when transferring |
| months remaining. Furthermore, if payments on auto | | | | from one area to another. |
| leases with less than 10 months must be included in the | | | | - Non-purchasing Spouse: If a married mortgage |
| qualifying ratios. The minimum payment on all | | | | applicant is purchasing a property by himself/herself, |
| revolving accounts (i.e. credit cards) is also factored | | | | the credit obligations of the spouse must be included |
| in. If the borrower has an open revolving account | | | | with the application and will be factored in with the |
| without a balance, $10 per open account should be | | | | borrower's credit obligations and used to determine the |
| included when qualifying. Any loan where the Florida | | | | financial capacity of the borrower. Furthermore, the |
| mortgage applicant has co-signed for another party | | | | non-purchasing spouse may be required to sign a |
| is included with their debts unless the borrower can | | | | security instrument or documentation relinquishing all |
| prove that the other party has made the payments on | | | | rights to the property. |
| their own for a minimum of 12 months. | | | | |