Under 620 Credit Score

Most banks, credit unions, and mortgage bankers have minimum credit score requirements for mortgage loan applicants.  Many banks, credit unions, and mortgage bankers require minimum credit scores of 640 FICO while others require a 620 FICO credit score for mortgage loan applicants.  There are countless of mortgage loan applicants who get turned down for a residential mortgage loan because they have credit scores under 620 FICO and unfortunately, many mortgage lenders who turn these folks down because they do not meet their lending institution’s minimum credit score requirements, they do not refer them or advice them that just because they do not meet this lender’s minimum credit score requirements, that they can qualify with other residential mortgage lenders.  You can get a mortgage with 580 credit score.

Minimum FHA Credit Score Requirements

To qualify for a FHA insured residential mortgage loan, the minimum credit score requirement is 530 FICO.  For mortgage loan applicants with credit scores between 530 FICO and 579 FICO, a 10% down payment is required to qualify for a FHA insured mortgage loan.  To qualify for a 3.5% down payment FHA insured mortgage loan,  the mortgage loan applicant needs a 580 FICO credit score.  I specialize in helping mortgage loan applicants get a mortgage with 580 credit score.  Why do banks, credit unions, and some mortgage bankers deny mortgage loan applicants with credit scores under 620 FICO?  The answer to this question is because most banks, credit unions, and mortgage bankers have mortgage lender overlays.   What are mortgage lender overlays?  Mortgage lender overlays are the lender’s additional guidelines above and beyond the minimum FHA mortgage lending guidelines.  It is not against federal lending guidelines to have mortgage lender overlays.  A particular lender can deny a mortgage loan applicant whose credit scores are 640 FICO if they decide they will have their own mortgage lender overlays and not accept any mortgage loan applicants with a minimum of a 640 FICO credit score.

Lenders That Specialize In Mortgage With 580 Credit Score

I specialize in helping mortgage loan applicants get mortgage with 580 credit score.  Many mortgage loan applicants who need mortgage with 580 credit score believe that they will get outrageous rates.  However, this is not the case.  You can still get a mortgage with 580 credit score at a mortgage rate of 4.25%, 30 year fixed rate on a FHA loan.  However, there are some setbacks to get a mortgage with 580 credit score.  Per FHA mortgage lending guidelines, any mortgage loan applicant with a credit score under a 620 FICO credit score, the maximum debt to income ratio is lowered to a 43% back end debt to income ratio.  If your credit score is greater than 620 FICO credit score, then the maximum back end debt to income ratio is capped at 56.9%.  Mortgage rates for those under a 620 FICO credit scores can be higher than those with credit scores under 620 FICO depending on the wholesale mortgage lender.  However, if the mortgage loan applicant has compensating factors such as rental verification and credit tradelines, there are wholesale mortgage lenders that still offer rates as low as 4.25% for mortgage loan applicants with credit scores as low as 580 FICO.

MortgageLenders With No Mortgage Lender Overlays

If you have gotten denied for a residential mortgage loan from a bank, credit union, or mortgage banker because your credit scores are under 620 FICO, you can still qualify for a residential mortgage loan.  Your best bet is to contact a mortgage broker who has relationships with wholesale mortgage lenders who do not have mortgage lender overlays.  Remember, minimum FHA mortgage lending guidelines only require a 580 FICO credit score for a 3.5% down payment home purchase loan.  Many mortgage lenders with no mortgage lender overlays will just go off the approve/eligible DU FINDINGS or approve/eligible LP FINDINGS.  Your automated approval from the Automated Underwriting System is your final approval.   If whatever information you have stated on your mortgage loan application can be verified, your mortgage with 580 credit score will be your final approval.

Gustan Cho

www.gustancho.com

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

2 Comments

  1. Arleca Bates says:

    I was wondering if you would finance a house in NEW YORK