Bad Credit, Debt, and Low Income are Reasons for FHA Loan Rejection


Bad credit scores, excessive debt, and insufficient income are now the top reasons why borrowers received rejection for FHA loans in 2015, according to a new informal survey conducted by the Home Buying Institute.

The survey of over 50 mortgage lenders showed a bad credit score, excessive debt, and insufficient income are the main obstacles in obtaining an FHA loan.

According to the Department of Housing and Urban Development, borrowers need a credit score of at least 500 to be eligible for an FHA loan in their tier one grouping.

To qualify into tier two, which gives borrowers a 3.5 percent down payment option, a person would need a score of 580 or higher.

However, mortgage lenders can themselves impose their own requirements and a previous survey conducted by the HBI showed many lenders want a minimum score between 580 and 620.

Continue reading Bad Credit, Excessive Debt, Low Income Cited as Top Reasons for FHA Loan Rejection