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

Lenders are raising the bar on Credit Scores

Your credit scores have never been more important than now. Recent turmoil in the mortgage industry has caused lenders to raise the bar on credit score requirements for different loans. The cause of this is the significant tightening up in the mortgage insurance industry. Mortgage insurance varies from state to state, but is required if you don’t put down a considerable amount of money on a loan. During the mortgage meltdown that has taken place over the last couple of years, mortgage insurance companies starting seeing enormous amounts of claims on certain loan types. These particular loans have had their bar raised on credit scores in order to even get financed since the banks cannot get certain types of borrowers and loans insured now.

Credit Score requirement for Conventional loans.

 95% Conventional loans-Minimum 620 + Credit Score.
 100% Conventional loans-now requires a 20% second lien – 720+ Credit Score
 95% Conventional stated loans-requires a 720 + Credit Score

*Some credit score requirements may vary from lender to lender, but this is a good bar to go by.

Credit Score requirements for FHA loans.
Believe it or not this is a very controversial move on the lenders, because FHA does not have a credit score requirement. I know for a FACT that HUD is very concerned about this since they do not have a credit score requirement to insure their loans. The lenders that are providing the financing do, due to the high foreclosure rate for credit scores below a 580. With this being said most lenders now require a minimum of a 580 credit score to finance you FHA. This is just an example of how the credit score is so important to get financing these days. If you are in the market to buy a home, we suggest that you see where you stand. Pulling a copy of your consumer credit report with credit scores does not affect your credit score what so ever.

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, identity theft protection, secured credit cards, student 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

With my Credit Score can I get a mortgage?

Are you wondering if you can get a mortgage with your current Credit Score? I am sure everyone is sick of hearing about the current credit crunch. It is a never ending cycle in the lending industry. The banks loosing up and everything starts to foreclose. The banks tighten up and less people are buying homes because they don’t have the credit to buy with all the new restrictions. Either way the “American Dream” of home ownership is always on our minds. It’s that one common thread of personal accomplishment that all Americans strive to achieve. I know that most people want a piece of the American pie.
I am going to discuss the current plain old vanilla loans that are available to you, and what it will take to get into one of these loans.

FHA loans
FHA loans have been around since the mid 1930’s, and is the biggest insurer of loans in the world. (FHA), Federal Housing Authority is a government insured loan that is more attractive to bankers because there is less risk. Basically this type of loan is the strongest loan in the current market. The reason for this is the guidelines to get this type of loan are still the same as they were 5 years ago. There is less requirements to get into a FHA loan, and has a minimum down payment requirement. Here are some key points as to why FHA loans are so attractive today and will continue to be one of the top loans out there.
• Low down payment of 3%
• Will Allow Down Payment Assistance, which eliminates you needing 3% down payment
• Low interest rates
• No Credit Score Requirement
• Allows hardship loans, for individuals that have had past credit issues.
• Allows you to get a loan while in a Chapter 13 Bankruptcy, conditions apply.
• Allows you to get a loan with no credit, typically the underwriter will ask for alternate lines of credit.
Examples:
1. 12 month payment history in good standing from three sources.
a. Electric provider
b. Car Insurance provider
c. Day Care
d. Cell Phone Company

This is just some examples of how someone who does not have credit reporting on their credit report can use alternate sources of payment history to show creditworthiness. You cannot do this with Conventional loans that are backed by Freddie Mac and Fannie Mae.

Conventional Loans
Conventional loans are loans that are not insured by the Federal Government. They are loans that are secured by government sponsored entities, such as Freddie Mac and Fannie Mae. These types of loans are stricter in the approval process, and are typically run through an automated software process. This process either says “yes” or “no.” With all the current tightening up in lending, this particular loan is less attractive for borrowers with credit issues and low credit scores. With all the current foreclosures and the tightening up with Mortgage Insurance companies, there is a credit score requirement of 620 or above with conventional loans currently.

Since we are going through obvious changes in lending currently, it is very important you know where you currently stand with your credit score. There are some changes going on in FHA as well, even though FHA does not have a credit score requirement the bank that buys these loans may. So if you have low credit scores, you might need to increase that score even to get a FHA loan in this current market. Get a current copy of your free credit score report, and if you have issues there has never been a better time than now to work on your credit so you can buy in the near future.

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, Internet identity theft software, secured credit cards, student 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