Credit Score Requirements Ease for Some
While tight lending guidelines have weighed on the U.S. housing market during its ongoing recovery, hope is in sight. Read on to learn how some borrowers are now qualifying under new policies.
Good News for Homebuyers
Tight lending guidelines have weighed on the U.S. housing market during its ongoing recovery. Most lending institutions during the past two years raised their credit score requirements to as high as 650, making it nearly impossible for many people to obtain a loan.
Wells Fargo made it a little easier for homebuyers this past year, when the lender lowered its credit score requirements on FHA mortgages.
Down Payments Pave the Way
Under its new policy, Wells Fargo will accept borrowers with credit scores of 500 to 579 if those borrowers can make a down payment of at least 10%,” said Robert Lentini, a mortgage expert who blogs for the website thetruthaboutmortgage.com.
Borrowers with credit scores of 580 to 599, must put down 5%. Borrowers with credit scores of 600 or higher can make a lower down payment of 3.5%.
When it Comes to Buying a Home, You're More Than Just a Number
Quicken Loans, Inc. adapted similar policies— dropping to a minimum 580 FICO score. “There are folks who have steady incomes and a solid payment history but were temporarily affected by the economy or a life event in some way." said Quicken Loans Inc.’s Chief Economist Bob Walters.
Walters went on to say,
“We believe that a credit score, on its own, is not the sole arbiter of a person’s credit worthiness. This change will open up credit to a significant group of people and allow them to again have access to purchase or refinance a home.”
Such developments have been welcome news to FHA Commissioner David Stevens, who earlier this year urged lenders to lower their minimum credit score requirements to
help the real estate industry as a whole –
an appreciated move
to be sure.
A Welcome Change
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Thankfully, hope is on the horizon with new FHA loan policies and lower credit score requirements.
For those with lower FICO scores,
home buying can be a challenge.