COLLECTIONS- FHA Mortgage lenders do not required to pay off all collection accounts. However, outstanding collections will reflect on your credit worthiness overall and may be held against you. In this case FHA Mortgage Lenders may requires that one or more of the collections may need to be paid off in order to improve your credit score and show your willingness to pay debts.
JUDGMENTS- Court-ordered judgments must be paid off in order for an application to be eligible for an FHA mortgage which is a requirement of an FHA loan. Occasionally, a FHA mortgage lenders may accept documentation that shows you have agreed to pay and have paid at least 6 months on a repayment plan towards the judgment, instead of requiring you to pay the full amount off beforehand.
FHA mortgage lenders will evaluate collections and judgments on a case-by-case basis. In both instances (collections or judgments) the FHA mortgage will have to explain the circumstances of the negative in writing.