Credit Analysis for Home Loans

A borrower must demonstrate an good to excellent repayment history of all debts. In addition, the borrower must have a minimum credit score of 620 to qualify for all conforming loans.  FHA and VA do not have credit score requirements. Also, any outstanding collection accounts, charge-offs, judgments, and liens must be paid by closing and have an acceptable reason for the delinquencies (hardships, medical reasons, etc.). Repossessions, foreclosures and bankruptcies must have a minimum of two (preferably three) years since the discharge of the debt and the borrower must have re-established excellent credit for a minimum of 12 months (preferably 24 months). If extenuating circumstances do not exist for the foreclosure or bankruptcy, the borrower(s) must have a minimum credit score of 660 (conforming only).  If a person is currently in a Chapter 13 bankruptcy, they may still qualify for a FHA loan provided the court approves the transaction and the borrower can demonstrate a timely payment history for at least 12 months.