Buying A Home During Credit Counseling
Paying down debt through a credit counseling plan does not have to stop you from buying. FHA and at least one VA program we offer have clear rules for borrowers who are still in a plan.
What lenders check when you are in a plan
Each item below is a requirement of FHA or at least one VA program we offer.
- On an FHA loan reviewed by FHA’s automated scorecard, being in a credit counseling program does not by itself force a downgrade to manual underwriting.
- On that automated FHA file, no explanation or other documentation about the plan is needed.
- On a manually underwritten FHA loan, one year of the plan’s payout period must have passed.
- On a manual FHA file, your plan payments must be satisfactory, with every required payment made on time.
- On a manual FHA file, you need written permission from the counseling agency to enter into the mortgage.
- For borrowers with past credit problems, at least one VA program looks for 12 months of satisfactory plan payments and the agency’s approval of the new credit.
You can stay enrolled
No automatic downgrade
Written agency permission
On-time plan payments
A VA path too
Jumbo is different
Can You Buy While In A Debt Management Plan?
Yes, under FHA rules and at least one VA program. A manually underwritten FHA file needs on-time plan payments and the agency’s written permission.
If you are paying down debt through a credit counseling agency’s plan, FHA does not treat that as a disqualifier. HUD states that participating in a consumer credit counseling program does not disqualify a borrower from an FHA-insured mortgage.
Which rules apply depends on how the file is underwritten. If FHA’s automated scorecard reviews the loan, the plan alone does not require a downgrade to manual underwriting, and no explanation is needed. If the file is manually underwritten, one year of the payout period must have passed, your payments must be on time, and the agency must give written permission. See our manual underwriting page for how a manual review works.
Veterans have a path too. At least one VA program may treat a borrower with past credit problems as a satisfactory risk after 12 months of satisfactory plan payments, with the agency approving the new credit. If your credit was good before you joined the plan, that program treats it as neutral or even positive. Jumbo is stricter: at least one jumbo program will not accept borrowers who received credit counseling because of derogatory credit in the past seven years.
Why choose Saxton for buying during credit counseling
This page is for buyers who are enrolled in a debt management plan through a credit counseling agency and want to buy a home now.
Your Plan Is Not A Disqualifier
HUD says taking part in a consumer credit counseling program does not disqualify you from an FHA-insured mortgage.
Automated Files Stay Simple
When FHA’s automated scorecard reviews the loan, the plan alone does not force a manual review, and no explanation is needed.
We Flag The Agency Letter Early
A manual FHA file needs written permission from your counseling agency to enter into the mortgage. We tell you up front so the request does not slow you down.
A Year Into The Plan
For a manual FHA file, one year of the plan’s payout period must be behind you, with every required payment made on time.
Veterans Have A VA Option
If you had credit problems before the plan, at least one VA program may treat you as a satisfactory risk after 12 months of satisfactory plan payments, if the agency approves the new credit.
Good Credit Before Can Help
In at least one VA program, joining a plan while your credit was still good is a neutral or even positive factor, not a negative one.
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers about buying a home during credit counseling.
Yes, it is possible. HUD states that participating in a consumer credit counseling program does not disqualify a borrower from an FHA-insured mortgage. On a manually underwritten file, the lender must document the plan’s timing, your on-time payments and the agency’s written permission.
Not on its own. When FHA’s automated scorecard reviews the loan, the plan does not require a downgrade to manual underwriting, and no explanation or other documentation about it is needed.
One year of the plan’s payout period must have passed. Your payments must also be satisfactory, with all required payments made on time.
On a manual FHA file, yes. You need written permission from the counseling agency to enter into the mortgage. For borrowers with past credit problems, at least one VA program also looks for the agency to approve the new credit.
For borrowers with past credit problems, at least one VA program looks for 12 months of satisfactory plan payments and the agency’s approval of the new credit.
Not always. In at least one VA program, if your credit was good before you joined, the plan is a neutral or even positive factor. It is not treated as a negative item if you enrolled before your credit went bad.
It is harder. At least one jumbo program treats a loan as ineligible when a borrower received credit counseling because of derogatory credit within the past seven years.
Find out what you qualify for
Tell us where you are in your plan and we will show you the options that fit.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Draw requirements and variable rate terms apply. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.