Can you get an FHA loan approved with collections on credit. – FHA loans can get approved with a 580, but the norm is a 620 or higher. I would work with a loan officer or broker with a lot of FHA experience, and still try to get the score up.
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Remember, unless the loan is "Rule of 78", its a simple interest loan. meaning you can pay it off at any time without a pre-payment penalty and you pay the interest and principal. Rule of 78 is when you pay interest first, then principal (a way for the bank to get their money faster).