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.