Good news for some buyers! Wells Fargo, the largest originator of FHA mortgages has loosened up a bit & recently revised credit & down payment requirements. Wells will now lend to applicants with FICO scores as low as 600 and 3.5% down payments ( can be gift funds).
Previously, if your score came in even slightly lower, they wouldn't even look at your application. How big a news is this for buyers AND sellers who need qualified buyers in the market? An estimated 1/3 of Americans now have FICO scores below 620, according to one consumer group's estimate.
What about borrowers with lower scores? There are options available:
- 580-599 - 5% down - no gift funds.
- 500-579 - 10% down - no gift funds.
Sellers can contribute up to 3% toward buyer closings & loan costs.
There are tight debt ratio requirements: Mortgage payment must be below 31% of income & total debt must be below 43% of income.
The idea is to provide homeownership opportunities to genuinely qualified buyers who simply have temporarily depressed credit scores.
Bravo!
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