Home Loan Approval Problems: Missed Payments
July 19, 2023
If you are planning an FHA home loan, you might be wondering how to make yourself more attractive to a lender. Are you a good credit risk? The lender wants to know.
But your participating FHA loan officer knows that so-called perfect credit is rare, and it’s expected that borrowers may come to the application process with credit mistakes in their past.
Perfect Credit: A Myth?
Credit mistakes are common. Financial hard times in the last few years have affected so many Americans that the old credit standards seem obsolete.
And while those standards haven’t changed, some home loan programs, including FHA mortgages, make provisions for borrowers with finances affected by COVID, natural disasters, and other variables.
You do not need perfect credit to apply for and get approved for an FHA mortgage or an FHA refinance loan. But you do need to put some time between recent credit problems and your home loan application.
Types of Missed Payments
Some lenders may be more willing to forgive a credit lapse on a store credit card than for housing. If you have late housing payments on your credit record, ask the lender what the general rule for that financial institution is where waiting out that late payment is concerned. What do we mean by this?
Time Is an Important Factor
The age of your credit mistakes is a big deal, and the bigger the credit problem, the older those mistakes should be before you apply for new credit.
Did you have a missed credit card payment in the last 24 months? A single issue like that may not be enough to derail your home loan application for one very good reason. Time.
If you put at least 12 months between your last missed payment and your home loan application, your chances or loan approval are far greater (assuming you otherwise qualify) than if you submit a loan application with a missed payment that is less than 12 months old.
You improve your chances of loan approval by delaying your home loan application until at least 12 consecutive months after missing a payment.
Missed housing payments may be considered at “another level” where creditworthiness is concerned; your lender will be keen to make sure you are a reliable payer where your housing expenses are concerned. But the 12-month rule still applies. Wait out that late or missed payment.
Those who have been working on lowering their outgoing debt, improving their credit utilization, and waiting out any missed payments until the 12-month window has passed? These applicants are far more ready to apply for a home loan.
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Know What's On Your Credit Report
FHA Loans Have Credit Requirements
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But your participating FHA loan officer knows that so-called perfect credit is rare, and it’s expected that borrowers may come to the application process with credit mistakes in their past.
Perfect Credit: A Myth?
Credit mistakes are common. Financial hard times in the last few years have affected so many Americans that the old credit standards seem obsolete.
And while those standards haven’t changed, some home loan programs, including FHA mortgages, make provisions for borrowers with finances affected by COVID, natural disasters, and other variables.
You do not need perfect credit to apply for and get approved for an FHA mortgage or an FHA refinance loan. But you do need to put some time between recent credit problems and your home loan application.
Types of Missed Payments
Some lenders may be more willing to forgive a credit lapse on a store credit card than for housing. If you have late housing payments on your credit record, ask the lender what the general rule for that financial institution is where waiting out that late payment is concerned. What do we mean by this?
Time Is an Important Factor
The age of your credit mistakes is a big deal, and the bigger the credit problem, the older those mistakes should be before you apply for new credit.
Did you have a missed credit card payment in the last 24 months? A single issue like that may not be enough to derail your home loan application for one very good reason. Time.
If you put at least 12 months between your last missed payment and your home loan application, your chances or loan approval are far greater (assuming you otherwise qualify) than if you submit a loan application with a missed payment that is less than 12 months old.
You improve your chances of loan approval by delaying your home loan application until at least 12 consecutive months after missing a payment.
Missed housing payments may be considered at “another level” where creditworthiness is concerned; your lender will be keen to make sure you are a reliable payer where your housing expenses are concerned. But the 12-month rule still applies. Wait out that late or missed payment.
Those who have been working on lowering their outgoing debt, improving their credit utilization, and waiting out any missed payments until the 12-month window has passed? These applicants are far more ready to apply for a home loan.
------------------------------
RELATED VIDEOS:
Know What's On Your Credit Report
FHA Loans Have Credit Requirements
Help Is Available With Down Payment Grants
Do you know what's on your credit report?
Learn what your score means.
