Underwriting Credit Cuidelines During Mortgage Process

Credit / Underwriting credit guidelines in mortgage application process:

Loans must comply with FHA policies and the policies outlined within this document.

Credit Report and Scores

A tri-merge credit report is required on all loans.  A tri-merge credit report is credit reports from all three mahor credit reporting agencies, Equifax, Experian, and Transunion.   For Streamline Refinance transactions, it is used solely to validate the credit score.

Credit Score Methodology In Underwriting Credit Guidelines

Credit Score Methodology

The following criteria may be used to determine each individual borrower’s credit score using the “middle/lower” method in underwriting credit guidelines.

If there are three valid credit scores for a borrower, the middle credit score (numerical middle of the three scores) is used in underwriting credit guidelines by mortgage loan underwriters. 

If there are three valid scores for a borrower but two of the scores are the same, the duplicate score is used in underwriting credit guidelines by mortgage underwriters.

If there are two valid scores for a borrower, the lower of the two scores is used in underwriting credit guidelines by mortgage loan underwriters. 

If there is one valid score for a borrower, that score is used in underwriting credit guidelines by mortgage loan underwriters.

Mortgage Loan Selection In Underwriting Credit Guidelines

Loan Score Selection

After selecting the appropriate Credit Score for each borrower, the Loan Score must be determined.

If there is more than one borrower, the lowest selected Credit Score among all borrowers is the Loan Score.

When there is only one borrower, the selected Credit Score for that borrower is also the Loan Score.

Minimum Credit ScoresFeature Standard  Specialty
Purchase and Rate/Term 

 

620 FICO  580 FICO if LTV >90%560 FICO if LTV≤0%

 600 FICO if High Balance

Streamline Refinance  620 FICO 

 

580 FICO if LTV >90% 

560 FICO if LTV 90%

 600 FICO if High Balance

Borrowers withouta credit score Not eligible  Assume 580 FICO for pricing
Cash Out Refinance  620 FICO  Conforming Balance:
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.

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