Qualifying for a 203k Loan in Texas

Qualifying for a 203k Loan in Texas

By Leesa Sandoval | Mortgage Programs

Sep 20

When looking for a 203k loan in Texas the first thing to do as with any loan is to get pre approved. So you are probably asking yourself what is the process for qualifying for a 203k loan in Texas? Well let me break it down for you. It really isn’t much more difficult than qualifying for a traditional FHA loan. It is important for you to know that each lender can have specific requirements and typically they do vary from lender to lender.

First let’s talk about the credit score requirement for a FHA 203k loan…..most often you are going to find that a 640 middle credit score (FICO score) is going to be required. As a lender, when we pull your credit we will pull from all 3 bureaus and you will be qualified based on that middle credit score. It is not an average of all 3 scores as many people think. Now if there are 2 borrowers on the application all 3 bureaus will be pulled and you will be qualified on the lower of the 2 middle scores. But the great thing about FHA and the FHA 203k loan is that the credit score requirement is one of the lowest of any of the programs.

For traditional FHA 203b financing the score is a bit lower and would only require a 620 to qualify for an FHA without renovation rolled into the loan.

Next is going to be work history. For W-2 wage earners, lenders will be looking for a 2 year history of steady income…any bonuses or overtime has to be consistent in order to be counted. By consistent usually we are looking for a 2 year continuance. For self-employed borrowers a 2 year history of tax returns for personal and business will need to be reviewed. Declining income will require an explanation.

There are several other factors that may come up that will need to be considered such as previous bankruptcy, foreclosures and short sales, for example. Below you will see the typical requirements regarding seasoning on some of these occurrences. Lenders want to see re-established credit and no late payments along with documentation that the event is not likely to occur again.

Chapter 13 Bankruptcy

  • Does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that;
  • One (1) year payout period under the bankruptcy has elapsed; and,
  • Borrower’s payment performance has been satisfactory and all required payments have been made on time; and,
  • Borrower has received written permission from bankruptcy court to enter into mortgage transaction

Chapter 7 Bankruptcy

  • Does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that;
  • Two (2) years since discharge date to application date
  • Must document that the borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur.


  • A borrower is generally not eligible for a new FHA-insured mortgage if during the past three (3) years a foreclosure or deed-in-lieu has occurred (previous personal residence or other real estate owned).
  • Three (3) years from foreclosure settlement date to application date (date title changed ownership) is required.
  • If included in Chapter 7; date of foreclosure deed is used for determining foreclosure date (NOT bankruptcy discharge date).
  • Must have re-established credit.
  • No late mortgage or installment payments allowed after the foreclosure date; and,
  • Must provide letter of explanation as to the reason for the foreclosure as well as why it is not likely to recur in the future.

Well if you have made it this far you can see there is a lot to consider but that’s where I come in. Let me do the review and take the stress out of the qualification process.

Whether you want to qualify for a FHA 203k loan or traditional FHA financing give me a call today and let me take the mystery out of the qualifying process.

About the Author

• Leesa Sandoval • 972.725.9110 ⇒ I have been a Mortgage Loan Consultant in Dallas, TX for over 13 years, and I specialize in FHA 203k Rehab Mortgage Financing .....(Read Full Profile)

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