FHA Government Home Loans Bad Credit in Texas: 4 Key Things to Know


A bad credit score can work as a roadblock and can restrict a home buyer from getting approval for a home loan program. But you can buy a home of your dream despite having a bad credit score when you apply for an FHA loan program. Insured by the Federal Housing Administration and offered by the FHA-approved lenders, this loan makes it easy to achieve your dream of homeownership.

But before you apply for FHA government home loans bad credit in Texas, you should know these things –

  • Advantages of a bad credit FHA loan

If you have a bad credit score and you want to apply for a home loan, then an FHA loan will be beneficial for you when you compare it with other loan programs. Here are a few benefits of getting a bad credit FHA loan –

  • Low income allowed
  • High debt-to-income ratio permitted
  • Low credit scores down to a 500 FICO
  • Gift funds are allowed for the down payment
  • Non-occupying co-borrowers can also cosign to help you qualify for the loan
  • With at least 10% down payment, your annual mortgage insurance premium will be lower

You can easily understand that FHA loans offer more benefits than other home loan programs. It is especially true if you have a bad credit score.

  • Bad credit FHA loan requirements

The requirements for bad credit FHA loans are more lenient than conventional home loan programs. Here are the general requirements –

  • Minimum 500 FICO credit score
  • Minimum 10% down payment with a FICO score below 580
  • Minimum 3.5% down payment with a FICO score above 580
  • Mortgage Insurance Premium (MIP) is required for every FHA loan
  • Maximum debt-to-income ratio of over 50%
  • The home should be a primary residence
  • The borrower should have a 2-year work history with steady income

Although borrows need 10% down if your FICO credit score is below 580, they can accept gift funds from a relative for some or all of the down payment. This gift can also be large enough to cover FHA closing costs if needed.

  • Bad credit FHA lenders

Although the FHA published their own guidelines, not all FHA-approved lenders abide by these. They are permitted to overlay their own restrictions that may prevent a borrower like you from getting an FHA loan with a bad credit score.

However, you don’t need to worry. There are various FHA-approved lenders who offer FHA loans despite a low credit score. So, you should ask for quotes from different FHA-approved lenders, compare these and then opt for the one who is offering the best quote to you.

  • Bad credit mortgage loans guaranteed approval

You often hear that there is no guarantee in life. But if you can meet the requirements below, your FHA mortgage approval is virtually guaranteed.

  • You meet the credit score and down payment requirements as mentioned above.
  • You have been employed with consistent documented income for the past two years.
  • Your income is sufficient to qualify for the loan amount you are looking for.
  • You have not had a bankruptcy in the last two years or foreclosure over the last 3 years.
  • The home is classified as residential, will be your primary residence, and is in livable condition.

Getting a conventional home loan approval with bad credit is not easy. On the flip, you can easily get an FHA loan approval with bad credit. So, start looking for FHA-approved lenders and apply for the loan today!

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