I’ve been in lending for the past 15 years and have seen a lot of different tolerance levels for credit scores. Back in the late 1990’s/early 2000’s, a 720 credit score was all you need to be at the top tier for some of the progressive loan products. However, since the death of subprime lending, FHA has now taken over as an alternative source of financing for lower credit scores.
There are a few banks out there that will go down as far as a 580 credit score, but they will condition the heck out of the borrower for 12 months cancelled checks to verify that there were no missed payments in the 12 months prior on rent. They will also require an acceptable explanation for the lower credit which can often times be tough to explain, however with a solid explanation, it can be something worth investigating. There are other options out there, but in order to obtain those type of loans, one must have a good 30% to put down.
With FHA financing, the minimum requirement is only 3.5% down. For the most part, a 620 credit score is needed for both conventional (FannieMae and FreddieMac) as well as FHA and VA financing. Feel free to reach out with questions, I’m here to help! Maureen Martin – Your Lender for Life