If you have a low FICO score, qualifying for an FHA loan just got easier. Prosperity Mortgage, in Devon, PA, is softening FHA credit overlays on purchase transactions.
Individuals with a FICO score as low as 500 may qualify for an FHA loan; most lenders place overlays on top of the minimum FHA score and typically require scores of 620 or 640 to qualify for an FHA loan. Each request with a FICO below 600 will now be sent for special consideration. Each client’s profile is unique, and there are additional requirements for those with a score under 600 SOME (NOT ALL) are highlighted below:
>FHA Purchase Transactions only to county limits ($417,000 for most of the counties in our local footprint and the ceiling on credit scores under 600).
Parameters are based on borrower decision credit score, as follows:
>Loan score 500-579 = Maximum 90% LTV (10% down payment). Max 3% seller assist, no gift funds for down payment.
>Loan score 580-599 = Maximum 95% LTV, (5% down payment). Max 3% seller assist, no gift funds for down payment.
>Loan score 600 or higher = Maximum 96.5% LTV (3.5% down payment), Max 6% seller Assist. Down payment can be part or all gift fund from allowable sources.
>More restrictive Debt-To-Income Ratios for scores between 599-500.
>Gift funds may not be used for down payment if credit score is under 600.
If you are looking to buy, but are fearful your credit is TOO LOW, there is an opportunity to get financing today, or be put on the path to correct your credit so that in 6 months or so, after you fix your credit, you will be ready to buy!
Contact me for more information if you are interested in purchasing a home, but are worried about your credit score.