It was previously believed that a minimum of 580 is needed to make the minimum down payment of 3.5% using FHA financing. However, many lenders require a score of 620 to 640 to qualify.
Thanks to a new FHA policy, we have started reducing the FHA minimum credit score requirements as low a 500 FICO score, opening home ownership to many of our first time home buyers. Not only that, we’ve increased the Debt to Income Ratio (DTI) as high as 50%.
Conventional loans offered by mortgage giants Fannie Mae and Freddie Mac certainly have their place in the market. But they are not very flexible regarding certain loan criteria. FHA fills in the gaps by offering mortgage approvals to those with:
- Medium to low credit
- Lower income
- Income from numerous sources
- Co-borrowers who do not plan to live in the home (non-occupant co-borrowers)
- Down payment gift money, but no down payment of their own
- Properties that are in need of repair
If you are looking for a loan for your dream home contact us for a no obligation loan estimate. We will be able to determine if we can offer you conventional financing or an FHA loan based on your situation. Click here for a quick quote or call or text (818) 308-5561 today!