FHA Loan Case Studies           

This section will provide you some case studies for your review. Each of these cases were actual loans that have been made. By reviewing these case studies it will give you a better understanding of the types of loans available through FHA loan Financing.  This information may be helpful and encourage you to apply for your FHA loan.

• Borrowers with No Down Payment

• Borrowers with Prior Bankruptcy

• Borrowers with No Credit Scores

Borrowers with No Down Payment

This case was a young couple who were getting married soon and wanted to buy their first home. They found a house and got under contract at a price of $94,900. They had approximately $500 in their checking account and $557 in a 401-k.

Between the two of them they made $3,480 per month and had $396 in monthly debts consisting of a car loan and two credit cards. The first borrower had been with his current employer a little over 1 year, but had been in the same line of work for 3 years. The co-borrower had been on her current job for just over a week after being on her previous job for 2 years. Their debt to income ratios was 25/33.

One of the borrowers had the following credit scores 653, 672, 595. The other borrower had no credit and thus no scores. Their credit was paid on time with the exception of a few minor medical collections totaling less than $500. Their current rent was $560 and their new payment was going to be $834.30

They were able to purchase a home using the Partners in Charity Down payment Assistance program which provided them a 3% Gift down payment.

The loan made sense as the borrowers were not trying to purchase the largest house they could afford, thus their debt ratios were very much in line. The minor collections were medical related and small in size and were not required to be paid off. Even though one of the borrowers did not have any credit the overall credit was acceptable. Though they lacked long job histories, the moves they made came with increased earnings and thus was again acceptable.

Borrower with Prior Bankruptcy


This borrower was a single person looking to purchase his first home. He has filed a Ch7 Bankruptcy 5 years previously. His current credit scores were 648, 620, and 657. Three years after the bankruptcy he had 2x30 day lates on a credit card and a small $78 charge off from a cable company. He also had 4 medical charge off within the last 3 years prior to his loan.

He had been on his current job for 8.5 years. He currently was not paying any rent as he lived at home with his mother.

In order to qualify to purchase a new home the borrower had to payoff a car loan that he had. This wipe out any money he had to purchase. Fortunately and very generously his mother was able to provide him with enough funds for a down payment.

However, he was buying the larges house he could afford as his debt ratios were 23/43.

This loan was approved. Since the Bankruptcy the borrower had re-established several new accounts all of which he had paid as agreed. He had a stable job history and had showed his ability to save money that was needed to payoff the car loan in order to qualify.


Borrowers with No Credit Score

On occasion you will find borrowers that for one reason or another do not have any traditional credit and thus no Credit Score.

This person was a first time buyer. He was of Hispanic origin. He was looking to purchase his first home for his wife and family. He had been on his current job for 2.5 years and was a permanent resident alien.

Due to his personal beliefs he had never established any credit. Everything he needed he paid for in case. If he did not have the cash, he did not purchase the item. In fact he did not even have a bank account and his entire down payment had been saved at home and was in cash, also know as "Mattress Money". He did have a 402-k at work with about $1200 saved.

Through verifying that his rent was paid on time and his utilities and auto insurance, the lender was able to establish "alternative credit" and the loan was approved with only 3% down. Having traditional credit is not a requirement of FHA. The other tricky part was verifying the down payment in which the lender had to do a budget with the borrower and show how the borrower was able to save they amounted needed for a down payment.

While this situation may seem uncommon to many, it is a very common occurrence with foreigners that have come to live in the United States. Many are very leery of banks and have not used credit like we do in the United States. Fortunately HUD early on recognized this and has allowed the American Dream to be available to many deserving families.