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Just because you don’t have student loans, credit card bills, car disbursements and other traditional business lines tracked by credit agencies doesn’t mean you can’t qualify for a credit loan.
Most often borrowers searching for a mortgage do not have enough traditional credit history to assign a reasonable credit rating to a lender. it’s not a big deal!
The good news is that FHA loan eligibility accepts non-conventional credit in situations where you have insufficient business lines with Equifax, Trans Union and Experian.
How does this work?
non-traditional credit reference
The FHA requires that as a borrower, you must have three credit references from two groups of non-traditional credit resources.
Group One – This first group of references is heavily weighted than the last group, which is believed to be a more accurate predictor of your credit value.
The first group includes utility payments such as electricity, water and gas. Rental payments, cable TV bills and telephone can also be included in the first group.
Group Two- Qualifying for the FHA is possible by including payment references such as day care, insurance payments, internet phone and 12 months of bank statements that show a history of deposits and thus an increased balance. The last group also allows personal loans in which settlement terms are documented and signed by both the concerned parties.
apply for fha financing
To be eligible for FHA financing, you must demonstrate that you are employed, have good job status and are trustworthy. You will need to provide the following when applying:
1. You have to submit your previous addresses within two years. If you are a couple who have different addresses, you must include both of your addresses.
2. You must be able to show your employment history over two years, including your monthly gross income along with the name of your employers and their addresses.
3. Submit your income tax forms and W2s for the last two years.
4. If you are a veteran, you must include your discharge papers as proof of your status as a veteran.
The ideal way to qualify for the FHA’s financing program is to demonstrate that you have become a creditworthy credit holder within two years.
To do this, you’ll need to pay off your old loans, make payments on time, avoid major debt purchases like buying a new car, and be with an employer. Keep in mind that qualifying for FHA financing is much easier than dealing with a private lender, but it is not free. You must show stable employment, dependability and an overall ability to make payments on time.
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