Your credit score has a lot to do with whether or not your mortgage will be approved but you might not be aware that in recent years, the credit score that is required in order to get a mortgage has actually fallen. If you are struggling with a poor credit score or a limited amount of cash for your down payment, you may want to learn more about the following changes with the Federal Housing Administration’s (FHA) credit score minimum.
About Revised FHA Regulations
Due to many adjustments in legislation and real estate market conditions, there have been a number of changes to the FHA approvals process which has recently made it a bit easier for applicants that are struggling with credit issues. Due to an adjustment of the minimum credit score that is allowed, those who have struggled with a high debt load, poor credit history or even a lack of credit history have more options when it comes to mortgage products on the market.
A Score Up To 580
In the event that you have a credit score of less than 500, you will not qualify for an FHA mortgage due to the financial risk that’s involved. If you do, however, have a score that sits between 500 and 579, you will qualify for financing but you’ll have to have a 90 percent loan-to-value (LTV) ratio. This means that if you do not have savings in the bank, you may have to wait for an adequate down payment amount before submitting your application.
A Score Above 580
If you are an applicant with a score of 580 or more, you have the ability to be financed for 100% of your home purchase. While this will only be valid for certain types of homes, it’s important to consult with a mortgage specialist beforehand so you can determine if your application will qualify. In addition, those with a higher credit score may not have to struggle as much with saving up the funds as they can pay a minimum down payment of 3.5%.
The score standards of the FHA administration are often adjusted due to legislation and market factors, so if you are struggling with a low credit score there may be mortgage options out there for you. If you would like to know more about your mortgage options and the application process, you may want to contact one of our mortgage professionals for more information.