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FICO Scores for Mortgage Loans


andie22
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Hello everyone,

I've been working my credit (so far so good), but I was wondering, what is the lowest FICO score allowed to be approved for a FHA mortgage loan?

What mortgage companies work with those of us that have low FICO scores?

Thanks very much... :)

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a lot of mortgage companies have programs for clients with low credit scores

it just depends on a lot of things in addition to your credit score

low credit scores usually require a sub-prime mortgage loan but there are tons of mortgage programs out there just make sure your loan officer is sincere, that is really what makes the difference.

good luck!!

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It was discussed on here a month or two ago that to get an FHA loan, lenders dont look at FICO scores, they look at payment and credit history.

I know from personal experience that I was told that I needed 6-12 months of on time payments to qualify.

Makes sense.

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you can get a mortgage with low 500s...

What they look for is past 2 years of good credit standing, no outstanding judgements, no recent collection accounts and you have to most likely have your job for at least a year.

Also, I been told that its a good thing if you have 4 tradelines in positive status on your CRs

Now, just so you know.. the score that you see for example in Credti Manager from Experian will be most likely higher about 50-60 points than what the mortgage place see. So For example, if you have like 600, they will most likely show as 540-550

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how much will they lend?

i have 550 average credit

but 2 years ago started my own business and make 90k per year now

is this FHA like project housing?

im looking to borrow 250k

no late payments in 5 years

can put down 20k on a home

anyone know if its worth it to see if i could get approved? dont wanna tag a inquire if i cant get the amount i need

thanks

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<blockquote>Originally posted by EddieTampa

how much will they lend?

Depends on your debt/income ratio

i have 550 average credit

but 2 years ago started my own business and make 90k per year now

is this FHA like project housing?

No no no FHA can be used on any home that meets their requirements. Usually meaning new or one without any major defects. FHA requires an inspection to take place to look for things like peeling paint, inoperable HVAC systems, bad plumbing, faulty electrical etc etc.

im looking to borrow 250k

Where do you live? Each county in the US has a different "cap" for the total amount you can borrow w/ an FHA loan.

no late payments in 5 years

Sounds good

can put down 20k on a home

FHA would only require 3%. But more is always better

anyone know if its worth it to see if i could get approved? dont wanna tag a inquire if i cant get the amount i need

thanks

</blockquote>

OK- I am not a mortgage broker or affiliated in any way with the business. The knowledge I have was just gained from my own personal research as I am trying to obtain an FHA loan right now, as well. Please check out what I'm saying on your own.

My first suggestion to you would be to make an appointment with a few mortgage brokers who handle FHA loans (not all do).

Bring copies of your tax docs, bank statements, and most importantly- credit reports.

Ask the broker "based upon the information I've given you, what could you do for me?" If they feel pretty strongly about being able to get you a loan, only then should you allow them to pull a report.

They are required to send you what is called a "good faith estimate". In it, they estimate what your interest will be and closing costs. This isn't necc. the exact figures you'll have once you find a home- make sure to get a new one once you do.

FHA isn't really score based, like others have said they look more into your past 2 years of credit history more than anything else.

I've also read that with a fico of 580 (and especially with your down payment), people can qualify for a low rate conventional loan.

There are drawbacks to both the FHA and conventional market.

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Section 8 housing is government housing.

FHA and VA are totally different. Unless someone is exceedingly wealthy, it was impossible for home ownership solely be a wage earner. That is where Uncle Sugar steps in with FHA and VA as financing vehicles. Similar to how student loans work. Who would loan an 18 year old student a huge sum of money who has no earning capacity or credit history except for Uncle Sugar. Of course some multi-millionaire would love for Uncle Sugar to finance his mansion, thus are limits to the value of a house that you can buy.

In addition, Uncle Sugar created Freebie Mac and Fannie Mae as an investment vehicle to churn out securities and further spur the growth of home ownership.

Although the credit repair veterans on this board are adamant that mortgagers don’t use a FICO score, that is not necessarily the case.

It is true that the FICO score is not the sole determining factor. It is one of many components for getting a mortgage.

When I worked for Homeside Lending (one of the largest mortgage bankers in the country and in the world before it was acquired by Washington Mutual), Fannie Mae was in the process of automating their underwriting procedures. We were one of the first mortgagers to use that automated process that could actually pre-qualify someone for a mortgage in minutes instead of days or weeks. In order to automate a process, you have to be able to crunch numbers, thus a FICO score is one component of the number crunching as well as debt ratio, etc. Crunching numbers is the only way to get an approval in minutes.

However, about every outfit has their own mathematical model of the values that they deem are of the appropriate risk. Some places are firm about having a 620 or even a 680 score.

Just go on Google and do a search of something like:

Mortgage Minimum FICO score

And you will see how many mortgagers have their criteria based on a FICO score. But that is not the only factor because a debt ratio, and numerous other factors are involved.

You can still get a mortgage with bad credit but you will be in the sub-prime market. A buddy of mine, his credit sucked big green donkey [EXPLETIVE DELETED] but he happened to have 35k burning a hole in his pocket, so he was able to cut a deal at a prime rate. At HomeSide Lending, we had programs that would ignore certain criteria if you had a wad of cash ready to lay down on the table.

Bad credit just means that you will have to pay an extra 100k for a house at the end of 30 years.

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