For the longest time, the investors seemed to keep moving up the minimum credit score for an FHA mortgage.  We started at a 580, then 600, then 620 and most lenders now have a minimum requirement of 640.  For the quite some time, it looked like we were headed to a minimum middle credit score of 660.  But that seems to be on the back burner now.  It should be noted, that a borrower with at least a 661 middle credit score will receive the best interest rate as they are not subject to the risk-based pricing.

 

 

 

There are however, some investors that have relaxed some of the credit score requirements and will now accept a lower credit score.  Now, I am not going to imply that these are going to be "easy" to get approved, and most likely the borrower will have to have more than one compensating factors in order to get approved.  But for a borrower that has good work and rental history and has been able to save part if not all of their down payment, this is a terrific option.  A consumer with a lower score can take advantage of still relatively low interest rates, lower purchase prices in most areas and with a good payment history moving forward can rebuild their financial life.

When possible, I recommend to my customers that they do everything possible to get their score as high as possible before they make the purchase, but sometimes, the amount of time it will take works against their time line.

For more information on FHA requirements please contact me or check out www.hud.gov.

 

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Kathleen Sheehan

Sr. Mortgage Consultant

NMLS #206275
Georgia Residential Mortgage Licensee #25839

600 Galleria Parkway

Suite 170

Atlanta, GA  30038

 

770.634.4021 cell

 


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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.

 

 
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4 Comments on 640 Credit Score for FHA, Maybe, Maybe Not

JUL
20
2011
1,652,689 Points 134 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

I've received word of some credit score requirment reductions from one of the banks here in Oklahoma about a week ago.. 
11:18pm • #1
JUL
21
2011
411,722 Points 15 Featured Posts Outside Blog Called Shot Master

There are a few wholesale lenders that have reduced the credit score requirement.  In fact, I closed one last week.
10:36am • #2
680,554 Points 51 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Kathy, I keep encouraging my buyer clients to continue to work on their credit. They just don't all understand how incredibly important it can be.
12:51pm • #3
411,722 Points 15 Featured Posts Outside Blog Called Shot Master

Connie, I agree, but sometimes with the right compensating factors a buyer may not have to wait until they get the score higher.  Besides a 12 month clear mortgage payment history on a credit report will do more to boost their score.
4:21pm • #4


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