Low Credit Scores down to 600 - FHA Loans - USDA Loans - VA Loans - Understanding credit scores & credit

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FHA credit scores to 600 – USDA credit scores to 600 – VA credit scores to 600


IMPORTANT information that you need to be aware of in regards to lower credit scores – 580 credit scores to 619 credit scores


600 credit scores - examining your credit

Low Credit Scores - You hear so much talk still out on the street about some mortgage companies that can do low credit scores down to 500, to 550, and to 580. There are some very important tips and information that one should be extremely aware of when speaking to a loan officer that says they can do such scores. My advice is not based on assumptions, because I have literally spoken to borrowers myself in regards to what was promised them, and then the closing falls apart at the last minute. I am not saying that this happens all the time.

Why do these types of loans not make it to closing, even though the loan officer stated that they could do such scores and or made promises?  It's a way to get you in the door, just like most sales. I have heard managers tell their loan officers to just bring the deal in now and that they will worry about the problems after the fact. Yes people, this does happen more than you would think. Integrity and professionalism is thrown right out the door.



I will sit here and tell you that any type of loan with a credit score lower than 620 will be harder to close.  I get about 1 e-mail per week from a borrower that found me online, that tells me their story on how they were promised a loan with a credit score of 585. Just because the lender has that kind of mortgage program with a rate and underwriting guidelines, doesn't mean that it will close. I had a client several months ago who was told that they could get a mortgage with a 590 credit score and that it should not be a problem. I educated her in what had to be done in order to close. She later on received a call from her previous loan officer who changed his story on how it would be much harder to get this specific deal done.

My assumption is that she was slightly more educated in this department now and he had originally sold her on the "don't worry, shouldn't be a problem" tactics that many sales people use. Not all, but some sales people, even loan officers, don't want to lose you as a client. If someone made you feel that it was going to be difficult, that it would be hard and more expensive, that many borrowers would seek someone else until they found a better answer.  Sorry borrowers, this is not a great way to shop for a mortgage.



In any case, here is an excerpt from a company that will allow borrowers to go down to a 580 credit score.


580 and above credit scores

















These mortgage requirements are for those with credit scores under 620. Now, at Infinity Home Mortgage Company, I can only go down to credit scores of 600. I will talk about this more later.

As you can see, the underwriting requirements are more strict when you have fico scores under 620.  I have spoken to a few lenders that say that you can go down to a credit score of 550, but you would need 15 percent down. FHA just proposed this requirement, that you now need 10% or more down with a credit score less than 580. I have a good feeling that this will be a requirement by this summer.

My whole point to this is that many borrowers are explained or educated on the details/specifics when trying to obtain a mortgage with less than a 620 credit score.  There is no guarantee to anything, especially when pertaining to mortgages in today's market.



Key Note – Most lenders won’t be able to underwrite a FHA loan with non-traditional credit. I can still do this myself.  Non-traditional credit is such credit as cell phone payments, utility payments, day care payments, car insurance, etc, etc.




Credit scores down to 600 at Infinity Home Mortgage

This is case-by-case, whether it's a FHA loan, a USDA loan, or a VA loan. (need a 620 or higher for conventional loans) We are looking for loans that make sense, just like the old days of FHA underwriting. You need to speak to a trusted mortgage professional that will educate you on the differences and explain to you that this won't be cheap. Just in general, you are looking at a pricing hit of about 2.5 points to 3.0 points additional just for credit scores down to 600 with our company.  I priced this out with the other lender that I know that can do this and their pricing hits are about 3.25 points to 3.5 points.  Just on a $200,000 mortgage, this could be an additional $5,000 to $6,000 more in costs. Or you could have a much higher interest rate which would raise your payment about $100 a month and that you still would have additional costs of $3,000 for added points.



Key Note – Most lenders that say they can do lower credit scores usually have to broker out your loan to a whole sale company that is set up to do these. Here at Infinity Home Mortgage Company, we actually underwrite these loans in-house. I would only have it this way because I would have full control over you loan then.





BUYER BEWARE – You just need to be careful on who you speak to and what kind of promises that one would make.  There is so much misinformation out there for several reasons. Either the loan officer doesn’t know or they are just trying to get you into the door.





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For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!




Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Mortgage Myth Busters



For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!



For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors


Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc


Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 02/16/2010 11:55 PM
  2. Broker Nick 02/17/2010 09:38 PM
Lending / Financial
New Jersey Camden County Cherry Hill
All About Mortgages/Mortgage Networking
1st Time Buyers
The FHA Mortgage Group
fha loans
fha mortgages
fha home loans
fha credit scores
600 credit scores
low fha credit scores
580 credit scores

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Tim Bradford
Cleveland, OH
NMLS 250013

Jeff,  In your post you said that FHA changed the requirements to require 10% Down with scores below 580.   Last that I heard was that FHA was going to post that proposal out for public comment.  Do you know if it has been posted yet?   I personally like it as an option for those "Worthy Pospects".   With that said the investors that we deal with will have to embrace it as well.   I do not know what your experience has been with the Property Flipping Revison.   HUD does allow it, however many investors have not. 

The other comment or question I have is, Can you use the Manual Underwriting if the borrower has credit scores below your Credit Score threshold?  

Feb 16, 2010 08:43 AM #1
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Thanks for the Update, Happy Mardi Gras!! New Orleans has the day off ! with Great Weather too!

Feb 16, 2010 11:15 AM #2
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

Uh oh. I need to make a call to some buyers ASAP! They already know about the rising down payment amount, and reduced seller contributions, but I'm not so sure they know about the change in the credit scoring! CRAP!

Feb 16, 2010 12:22 PM #3
Michael Gordon - Colorado Springs Mortgage Lender
Peoples Mortgage Corporation - Colorado Springs, CO

Jeff...thanks for sharing reality when many people only want to hear a false YES. Counseling those prospects with sub 620 scores on how to improve their scores, and their financial situation is always rewarding for me, and talk about a client for life.

Feb 16, 2010 12:46 PM #4
Steve, Joel & Steve A. Chain
Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA


As you say Government program minimums and lender minimums are 2 different things.


Feb 16, 2010 04:17 PM #5
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Great info Jeff, as always.  I'll be re-blogging this one.

Feb 16, 2010 11:54 PM #6
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Jeff, I have bookmarked this post.Thank you for the information.

Feb 17, 2010 09:45 PM #7
mike irwin

my credit is 584 can you get a home loan and i have a foreclsure from 2008

Dec 31, 2010 08:57 AM #8
mike irwin

my credit score is 584 can you get me a homeloan

Dec 31, 2010 09:04 AM #9
darrien miller

my credit scores are at 600 as of yesterday can i get a va loan

Mar 15, 2011 01:30 PM #10
Sylvester House
Trying to close Dec 22 2011, need an underwriter to finance me, my mid score is 614.
Dec 01, 2011 07:13 AM #11

We want to buy a home within a year. We just paid all but two collection accounts on my husband's credit report. We will be using his credit and income. His score is low but we are working on it. We have one car loan, 2 credit cards and a small personal loan from our bank to pay these debts off. His credit score is 576. All open accounts are paid on time. How long do you think it would take to get that score up to a 620? Could we do an FHA or USDA loan with a 600?

Dec 01, 2011 02:32 PM #12
Richard Alexander

Lookin for a VA LOAN IN Georgia   with 628 score, $40-45k loan amount 12 months employment, 12 months good credit nothing deragatory   and no down payment...



Does anyone know a lender that will do this loan... THANKS


Jun 23, 2012 03:49 AM #13
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