Today’s Credit Score Requirements for Mortgages

Today’s credit score requirements for mortgages are changing as more and more homes foreclose across the country. Have you ever wondered what the current credit score requirement might be to get a home? Depending on what type of loan you might qualify for will determine your credit score requirement. Typically the higher the risk, the higher your credit score needs to be. I will discuss 3 loans types in this article that are the most common loans underwritten nation wide.

Limited documentation loans
Before the mortgage meltdown, which by the way was only 2 years ago, you could get a 100% limited documentation loan with a middle credit score of 620. Typically this loan was called a stated loan as well. Basically a underwriter would not verify anything other than your credit score, and possibly a business license showing you have been in business for a minimum of 2 years. These types of loans were for people that were self employed and could not document any income due to all the deductions on there tax returns. Loans are like any other investment, they have to perform and produce a return. Unfortunately that is not what is going on, so the bar has been raised. Now you need at least a 680 credit score, and around 10 to 20 % down. The down payment will vary from lender to lender.

Conventional full documentation loans
Full documentation loans are loans backed by Freddie Mac and Fannie Mae. These two entities are two private organizations backed by the federal government. They buy loans that are ran through their automated underwriting engines and get approved based on that particular engines guidelines. Full documentation loans in the current market require a minimum of 620 credit score. The reason for this is the mortgage insurance companies that insure the loans backed by these two secondary market lenders require a 620 score to insure the loan. So basically everyone is raising the bar on requirements in order to get a mortgage. Full documentation loans typically require 2 years w2’s and or two years tax returns showing income on schedule C. There are lots of other variable involved as well, but this is a insight on full documentation loans. The lender will also require check stubs for the last 30 days showing income history.

FHA loan
Federal Housing Administration loans are loans that are insured by Housing and Urban Development (HUD). This particular part of the government has been providing insurance on loans since 1934. This loan is the most aggressive loan in today’s market, due to there being less risk to the banks that underwrite them. This loan actually does not have a credit score requirement, but the banks that underwrite them do. The current pattern across most banks is a middle credit score of 580. This loan also requires full documentation, such as w2’s and/or tax returns for the last 2 years.

With all the new guideline changes in the current lending market you can see how important it is to know your what your credit score are. If you don’t know, I would recommend getting a copy of your free credit score report today.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness