Minimum Credit Scores Mortgage Loan Programs On Home Purchase

This BLOG On Minimum Credit Scores Mortgage Loan Programs On Home Purchase Was UPDATED And PUBLISHED On February 27th, 2020

Minimum Credit Scores Mortgage Loan Programs

Income, credit, credit history, and credit scores are all determinants to qualify for mortgage loans. Every loan program has Minimum Credit Scores Mortgage Loan Programs.

  • The single most important factor in whether or not borrowers qualify for a certain type of loan program is credit scores

For example, the minimum credit score that is required to qualify for a conventional loan is 620:

  • HUD and USDA requires 580 FICO
  • Department of Veterans Affairs does not have a minimum credit score requirement
  • Fannie Mae and Freddie Mac has 620 minimum on conventional loans
  • NON-QM Loans require 500 credit scores
  • 95% LTV Jumbo Loans require 720 credit scores

In this article, we will discuss and cover the minimum credit score requirements on the various loan programs available at Gustan Cho Associates.

What Are Minimum Credit Scores Mortgage Loan Programs: Government Loans

Government Loans are home loans where a government agency insures and guarantees the lender in the event borrowers were to default on their home loans. FHA, VA, USDA takes partial loss due to foreclosure. Borrowers need to meet all government mortgage guidelines.

There are three types of government loans:

  1. FHA Home Loans
  2. VA Loans
  3. USDA Rural Development Home Loans

FHA Loans require a 580 minimum credit score to qualify for a 3.5% down payment home purchase. VA Loans does not have a minimum credit score requirement. Most lenders have minimum credit score requirements on VA Loans due to their own overlays. Gustan Cho Associates has no overlays on VA Loans and all other government and/or conventional loans. USDA Rural Development requires a 580 credit score minimum to qualify.

  • Anyone under a 620 credit score cannot qualify for a conventional loan
  • To qualify for a 3.5% down payment home purchase FHA loan, the minimum credit score required is 580 credit score
  • Home Buyers with bad credit can still qualify for an FHA loan with a credit score as low as 500
  • But anyone with credit scores between 500 and 579 credit scores, the home buyer would need a 10% down payment
  • For those with credits scores of less than 620, HUD debt to income ratio caps goes down to a 43% debt to income ratio

Credit scores were 620 or higher, the debt to income ratios can go as high as 46.9% front end and 56.9% debt to income ratio to get approve/eligible per Automated Underwriting System Findings.

Fannie Mae & Freddie Mac Guidelines On Credit Scores

What are Fannie Mae and Freddie Mac Credit Performance Guidelines

Conventional loans are credit score sensitive, unlike FHA loans.

  • To get the top rates on conventional loans, borrowers need credit scores of over 740
  • Mortgage rates will get rate adjustments every 20 points
  • For example, mortgage rate adjustments will factor in at the following levels
  • Borrowers will most likely get par rates with no adjustments at a 740 credit score for a conventional loan with 20% down payment on a single-family home

Then for every 20 points increments, there most likely be a negative adjustment towards rates:

  • 720
  • 700
  • 680
  • 660
  • 640
  • 620

With FHA loans, par rates are at 640 credit scores and higher so whether credit scores are 740 or 640 FHA mortgage rates will be the same:

  • There are negative adjustments for FHA mortgage rates for credit scores under 640

Credit Scores And Other Mortgage Loan Programs

There are other mortgage loan programs that require minimum credit scores.

  • For example, to qualify for a lender paid mortgage insurance ( LPMI) 90% Loan to Value Jumbo Loan with no mortgage insurance, borrowers need at least a 740 credit score
  • To qualify for a condotel unit portfolio loan, the condotel unit buyer needs a minimum of a 680 credit score
  • To qualify for non-QM loans, the minimum credit scores required is 500
  • Bank Statement Mortgage Loans for self-employed borrowers require minimum credit scores of 620
  • To qualify for a USDA loan, the minimum credit scores required is a 580
  • To qualify for an FHA 203K loan, the minimum credit scores required is 580
  • Borrowers can qualify for a VA Loans as long as they get an AUS Approval
  • VA does not have a minimum credit score requirements
  • But 580 is recommended for veteran borrowers to get automated underwriting system approve/eligible

Credit scores are extremely important if borrowers want to qualify for a certain loan program.

Qualifying For Home Loan With Direct Lender With No Overlays

How to qualify for a home loan with a direct lender without overlays

Home Buyers who need to qualify for a mortgage with a direct lender with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has zero overlays on government and conventional loans. We are correspondent lenders on non-QM loans and bank statement loans for self-employed borrowers. Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

This BLOG On Minimum Credit Scores Mortgage Loan Programs Was UPDATED On February 27th, 2020

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