CREDIT SCORE BELOW 640
There are still a few lenders that will approve a credit score below 640.
For emergencies or urgently required service, call:
|| to reach a mortgage specialist "on call".
Seems like there are only a few lenders today that will approve a credit score below 640. It was only a few years ago when you could get an FHA loan and credit score did not matter. Now with a credit score under 640, only a select few mortgage companies will finance your FHA loan. Even though there is actually no FHA guideline requiring a minimum credit score, the case remains.
Although there is actually no FHA guideline requiring a minimum credit score, virtually all mortgage lenders today require minimum credit scores to satisfy the needs of their investors. What most folks do not realize is that with an "FHA Loan", the federal government is insuring the loan, but the money is still coming from mortgage lenders and their investor sources; Wall Street, hedge funds, etc.
It is actually Wall Street and other investor sources that have put the mininum 640 credit score requirement on refinance and purchase mortgages.
Lenders requiring a minimum credit score of 640 usually require such for FHA, VA and USDA mortgages for all purchases and refinances.
Conforming mortgages such as Fannie Mae and Freddie Mac usually require higher scores; now days, generally scores above 640; usually 680 or more.
UNDERSTANDING GENERAL GUIDELINES FOR FHA
FHA loans per official guidelines generally require:
No Minimum credit score and certainly a credit score below 640 would be acceptable.
Two (2) years good housing payment history. (no 30 day late payments)
Two (2) years of good payments on any auto financing, credit cards and/or other consumer lines of credit showing up on your credit report ( a few scattered
30 day late payments are often acceptable, but you will need to be able to explain, why it happened, and why it won't happen in the future.)
No chapter 7 bankruptcy within the past 2 years ( sometimes you can actually get an FHA loan while in chapter 13, if the chapter 13 is 12 months old
with perfect payment history, and no other derogatory credit since the bankruptcy was filed)
No foreclosure within the past 3 years (if foreclosure on credit, you will need to explain why it happened and why it will not happen again, your
explanation will be subject to the approval of an FHA underwriter)
No collection accounts, charge offs, judgments and/or tax liens can be showing an open balance.
Other FHA guidelines that apply are:
LTV maximum is 96.5%
Seller Concessions toward closing costs are allowed:
Up to 6% of purchase price for 96.5% LTV
Escrow impounds are required.
Thus in effect you may be required to pay in advance at closing for several months worth of property taxes and homeowners insurance.