Mortgage and Lending with Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 NMLS # 6869




I wasn’t sure that I would see a lender that was willing to do FHA mortgages, down to a 500 credit score or even should, but this in now reality. Minimum  down payment is 10%, which should be higher and the interest rate is about 1% above the market rate and that should be higher as well.


I am not sure that I will do any loans with credit scores this low, as it just goes against all common sense. It would ready need to be a unique situation, with a large down payment, that might get me to consider doing a loan down to a 500 credit score.



Some lenders have a short memory or don’t have a reference point to any history regarding stupid loans that were done a very short time ago. To me, this is just looking for trouble, just saying. 


image courtesy of stuart miles/freedigitalphotos.net

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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com



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Show All Comments
Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

I think it's asking for trouble also Joe. With such a low credit score, your requirements should be much higher.

Sep 10, 2014 11:16 PM #1
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joe I agree.  That is subprime under a different name, and a rose or in this case skunk cabage by any other  name still smells the same.

Sep 10, 2014 11:48 PM #2
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Joe- I completely agree!  I would hate to see another year like 2008!  Hopefully people make good decisions when granting loans!

Sep 11, 2014 12:02 AM #3
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Hi Joe - I would be interested to see how many loans this lender actually CLOSES.  Regardless of what the lender is willing to accept, it still has to meet FHA's minimum credit guidelines in order to be insured by FHA.  Without a documentable catastrophic life event, I don't see these loans qualifying for FHA insurance.  Seems like a gimmic to me.

Sep 11, 2014 01:14 AM #4
Beth and Richard Witt
Long Island Cash Home Buyer - Center Moriches, NY
Long Island Cash Home Buyer 516-330-6940

This is crazy... but isn't that the case with everything in our country these days..

Sep 11, 2014 01:22 AM #5
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

I have not heard about this FHA program Joe. I can also agree with your feelings, clean up the credit report first before buying a home. I can only see something like medical issues with no insurance beyond the control of the person even being something acceptable for a loan like this.

Sep 11, 2014 02:01 AM #6
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


The new FHA program will help some buyers that have blocked out of buying a home.

Good luck and success.

Lou Ludwig

Sep 11, 2014 04:35 AM #7
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Great program for the right person, Joe - someone who's credit was decimated through no fault of their own (bitter spouse in a divorce, coborrower gone wrong, really, really bad luck).  Problem is, too many lenders will be trying to push these through for people that should not have access to a mortgage.  Just like option-ARM's and Interest-only's - programs designed for a very small demographic will end up being marketed to the wrong people. 

Sep 11, 2014 05:28 AM #8
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

I saw an email with the heading "Stated Loans are Back!" come through a few days ago...here we go again, I thought. 

As John Meussner said, though - and I agree with him - in limited circumstances, there are no "bad" loans, just loans being marketed to the wrong people.  

Sep 11, 2014 05:39 AM #9
Tom White
Franklin Homes Realty LLC (615) 495-0752 or www.FranklinHomesRealty.com - Franklin, TN
Franklin Homes Realty LLC, Franklin TN

Joe, while I would like to see just about everyone be able to buy a home, it's just not realistic. While it's possible that an individual had a catastrophic event causing a drop in their score, most of the time it indicates a poor risk. 

Sep 11, 2014 07:07 AM #10
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy


You make a good point about the short term memory...It will be interesting to follow the outcome.  A

Sep 11, 2014 07:23 AM #11
Anita Clark
Coldwell Banker Access Realty ~ 478.960.8055 - Warner Robins, GA
Realtor - Homes for Sale in Warner Robins GA

Joe: I hope this doesn't lead us down the path we just came off of. Our industry has still not rebounded in many areas.

Sep 11, 2014 08:19 AM #12
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

I agree with you, Joe. I can't believe this happening. My area is still recovering, so this is not good news to me. 

Sep 11, 2014 12:13 PM #13
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Many families may be helped with this program. A little higher rate is still very attractive in the current market. 

Sep 11, 2014 08:56 PM #14
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

Risk, it comes with a price. Is gonna cost you... if you can even get a loan.

Sep 11, 2014 09:03 PM #15
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Joe, with a sharp spike in Florida foreclosure rate makes one wonder if the greed for profit is now trumping common sense once again? Enjoy your day!

Sep 11, 2014 09:37 PM #16
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Hey Joe, yeah I have had this for about a year + now but agree with you its so RARE that a buyer who I feel comfortable to repay our loan would fall into this with that score I still think the lowest we have done to date is 530 +- a few points. We shall see what comes next but I PRAY its NON fed as they are OUT OF CONTROL right now

Sep 11, 2014 11:41 PM #17
Rebecca Gaujot, Realtor®
Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Hi Joe, totally agree with you about the FHA 500 FICO program.  May be good for some folks depending on the circumstances.

Sep 12, 2014 02:45 AM #18
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Joe, Makes no sense to me as I agree with your comments. I think low credit scores are a disaster waiting to happen. 

Sep 14, 2014 08:07 AM #19
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