Qualifying For FHA Loans With Under 620 Credit Scores

Qualifying For FHA Loans With Under 620 Credit Scores

This BLOG On Qualifying For FHA Loans With Under 620 Credit Scores Was UPDATED On January 16th, 2018

Over 75% of our borrowers at The Gustan Cho Team at USA Mortgage are folks who either gotten a last minute loan denial or are stressing over their mortgage process for one reason and one reason only:

  • The borrower were not properly qualified by their other lenders
  • Why is it that lenders have different credit score requirements
  • Most banks will require a 640 credit score while most mortgage lenders will only take mortgage applicants who have 620 credit scores
  • However, the U.S. Department of Housing and Urban Development (HUD), the parent of FHA, sets the minimum credit score at 580 for borrowers to qualify for 3.5% down payment home purchase FHA Loans
  • Lenders can have different credit score requirements that are above and beyond of FHA minimum credit score requirements

Home Buyers can qualify for FHA Loans With Under 620 credit scores.

Where Can I Qualify For FHA Loans With Under 620 Credit Scores

If you are a mortgage loan borrower and need to qualify for FHA Loans With Under 620 credit scores, the lender of choice needs to be a direct lender with no mortgage overlays. The Gustan Cho Team at USA Mortgage is a direct lender with no overlays on government and conventional loans. We cater to borrowers trying to qualify for FHA Loans With Under 620 Credit Scores. Home Buyers having a hard time getting approved for FHA Loans with under 620 credit scores have come to the right website and are in luck.

  • As long as credit scores are at least 580 scores, borrowers will qualify for FHA Loans
  • Back end debt to income ratios does not exceed 43% to get approved/eligible for FHA Loans With Under 620 Credit Scores
  • If credit scores are over 620 FICO, then front end DTI can be capped at 46.9% and back end debt to income ratios are capped at 56.9% to get approve/eligible per AUS

FHA Guidelines On Under 620 Credit Score Borrowers

Most mortgage lenders do have their own mortgage lending guidelines with are called lender overlays. Many lenders have overlays on credit scores between 620 and 640 credit scores.

  • Higher credit score requirements like 620 to 640  is not a FHA mortgage lending guideline 
  • They are mortgage lender’s own mortgage lender overlay
  • FHA only requires that the mortgage loan borrower have a 580 FICO score to qualify for a 3.5% down payment FHA Loan
  • The good news is that The Gustan Cho Team at USA Mortgage helps borrowers get approve for FHA Loans With with under 620 credit scores
  • The Gustan Cho Team at USA Mortgage is a direct lender with no mortgage lender overlays
  • As long as the mortgage loan borrower can get an Automated Underwriting System mortgage approval, we can close the loan

Can I Qualify For FHA Loans With Under 620 Credit Scores And Collections

The Federal Housing Administration does not require that open collections be paid off.

Charge offs are allowed and older late payments are acceptable.

  • However, recent late payments can be a problem
  • Mortgage underwriters do not want to see any late payments in the past 12 months
  • Any late payments in the past 12 months is frowned upon, however, it is not a deal killer if there were extenuating circumstances for the late payment
  • Never pay off an older collection account because it will plummet credit scores because it re-activates the derogatory credit item as a fresh derogatory
  • Credit report and payment history will be taken into account by the Automated Underwriting System prior to a decision
  • Again, the Automated Underwriting System will take into account the following prior to rending a AUS Approval:
    • Income
    • Reserves
    • Debts
    • Liabilities
    • Credit
    • Credit history
    • Credit scores
    • Assets

Contact Us If Told You Do Not Qualify For A Home Loan By Other Lenders

Again, borrowers who are told no by a bank, mortgage banker, or mortgage broker that they do not qualify for mortgage, please contact us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. A larger percentage of our borrowers have under 620 credit scores. 100% of our borrowers close on their mortgage loans once they get an approved eligible per DU or LP FINDINGS. All of our pre-approvals are full credit approvals underwritten and signed off by our mortgage underwriters.

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