Wells Fargo is providing FHA mortgages to borrowers with credit scores as low as 500. Most of the major banks have been requiring credit scores of at least 650 in some cases. At the National Association of Realtors annual conference in New Orleans, FHA Cmmissioner David Stevens stated these policies were out of sync with the FHA and artificially restrained home sales by as much as 20%.
Under Wells Fargo new policy, they will accept borrowers with credit scores of 500-579 if those borrowers can make a down payment of at least 10% - and gifted funds or down payment assistance is not allowed. For borrowers with credit scores of 580-599, borrowers must put down 5% with the same restrictions on gifts or assistance funds. Borrowers with credit scores of 600 or higher can make a 3.5% down payment.
This new policy actually took effect on January 15, 2011.