FHA loan mystery.

Edwards Finance > Loans

Q. Something doesn't make sense about FHA loans. The FHA guarantees the loan, so the lender shouldn't care much what the borrower's credit score is. But that implies people with extremely bad credit should be able to get FHA loans easily. But if that were true, why would there be so many companies advertising bad-credit mortgages? How could they possibly compete against FHA loans? People have to pay much higher interest to get a bad-credit loan, so why would anyone ever apply for one, instead of just getting an ordinary FHA loan, with much lower interest rates?

A. -To get an FHA loan you need above average credit and below average income. Someone with a high income who doesn't pay their bills on time doesn't qualify. -While FHA is not credit score sensitive it is credit history sensitive; individuals tha

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