FHA Lend

You can qualify for an FHA loan with collection accounts based on HUD guidelines. HUD, the parent of FHA, does not require borrowers to pay off outstanding collection accounts to qualify for FHA Loan. FHA loans do have specific rules and regulations when it comes to qualifying for a mortgage with large collection accounts. You do not have to pay outstanding collections and/or charged-off accounts to qualify for an FHA loan.

Collection and charged-off accounts need to be seasoned for at least 12 months from the date of last activity (DLA). To get an approve/eligible per automated underwriting system, the outstanding collection and charged-off accounts need to have been seasoned and should have timely payments in the past 12 months. Manual underwriting on FHA loans requires timely payments in the past 24 months.

https://fhalend.com/fha-loan-with-collection-accounts