“Credit Scores Continue Lower for FHA Borrowers”
A decrease in average borrower credit scores to 670 for FY 2018, the lowest average since 2008. This decline has continued in FY 2019 as:
– More than 28 percent of new forward mortgage endorsements in the first quarter of FY 2019 had credit scores less than 640; and
– More than 13 percent of new forward mortgage endorsements in the first quarter of FY 2019 had credit scores less than 620, nearly a 19 percent increase over the FY 2018 concentration.
Let’s translate the numbers. Over the last few years lenders have related guidelines and credit score requirements.
There are lenders that will do FHA loans down to a 500 credit score. Does that mean these are bad loans? I don’t think so but they have to be within reason and make sense.
I recently did an FHA mortgage for a client with a 530 credit score. You tell me if you would do the loan.
The client was recently involved in a nasty divorce and the credit really suffered as both parties stopped paying credit card debts.
And a pivotal piece of the information; My client was buying a $360,000 home and putting $120,000 down. Good loan or bad loan?