FHA Minimum Tradelines or Minimum Credit Reporting History
FHA mortgage applicants must have sufficient credit history to generate a valid FICO score, or FHA mortgage applicants must meet the non-traditional FHA mortgage lenders guidelines listed below. Generally, an acceptable credit history does not have late housing, installment debt or major derogatory revolving payments. Authorized tradelines are not acceptable for establishing a credit history and may invalidate the FICO score.
FHA mortgage applicants who have no established traditional credit references may be eligible using non-traditional credit references. A minimum of three (3) credit references each rated for 12 months is required. At least one (1) of the credit references must be housing related. Tradelines should be open and current or not closed within the six (6) months prior to the loan application. There can be no housing Iates and maximum 1 x30 day late payment with the other credit references in the previous 12 months. There can be no major adverse or public records filed in the last 12 months. Non-traditional credit references may not be used to offset derogatory pay histories on traditional credit. Non-traditional credit may not be used to enhance the credit history of a borrower with derogatory pay histories. Refer to FHA mortgage lenders FHA Lending Guides for additional information regarding the use of non-traditional trade references. All loans with non- traditional credit require a manual underwrite, max LTV allowed per program guidelines, maximum ratios of 31 o/o/43o/o, 1 month reserve requirement for 1-2 Unit properties. Three (3) month reserve requirement for 3-4 Unit properties, gift funds allowed for down payment and closing costs, and must follow standard FHA mortgage lenders guidelines as outlined in the Underwriting Guidelines.