FHA Non-Traditional Credit Guidelines           

Evaluating Nontraditional Credit

 The following offers guidance in evaluating borrowers with nontraditional credit histories. A satisfactory credit history, at least 12 months in duration, is to include:  

·        No history of delinquency on rental housing payments

·        No more than one 30-day delinquency on payments due to other creditors

·        No collection accounts/court records reporting (other than medical) filed within the past 12 months 

Insufficient Credit 

The following offers guidance in evaluating borrowers with no credit references, or otherwise having only Group II references.  A satisfactory credit history, at least 12 months in duration, is to include: 

·        No more than one 30-day delinquency on payments due to any Group II reference

·        No collection accounts/court records reporting (other than medical) filed within the past 12 months 

            In addition, for such borrowers, to enhance the likelihood of homeownership sustainability, the following underwriting guidance is being provided:  

·        Qualifying ratios are to be computed only on those occupying the property and obligated on the loan, and may not exceed 31 percent for the payment-to-income ratio and 43 percent for the total debt-to-income ratio. Compensating factors are not applicable for borrowers with insufficient credit references.