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Many mortgage lenders have a minimum credit score of 640 needed to do approve a FHA loan. But, that is not always true. I am able to do loans under 640. Here is the break down for FHA loans with scores under 640.

Credit Score 620 to 639

With any loan that has a score under 640 the underwriter wants to make sure the borrower is a strong client even thou their scores maybe lower. Here are the requirements needed to help you get approved for your mortgage with a score under 640:

1. A Debt to Income Ratio of 45% of less. This is a calculation of your debts divided by your income.
2. You will need to show reserves of the equivalent of your mortgage payment. This requirement is as little as 2 months of your mortgage payment. As an example, if your mortgage payment is $1000 then you would need $2,000 in the bank. These reserves must be after you buy the home, meaning you must have this after your down payment, etc.
3. Unfortunately, the rate is higher due to the risk of these types of loans. But the rate is not that much higher, usually up to .75% higher then the market rate.

Credit Score 580 to 619

The min credit score is a 580. This is an unbelievable program. Of course since this is such an aggressive program there are addition requirements. Here they are:

Min 580 credit score

Min down payment of 10%

5 months of mortgage payments as reserves

No Gift Funds are allowed

If self Employed, must be for 3yrs

Max debt to Income Ratio is 41%

No Credit Score

We have just announced that we now allow FHA loans with no credit score. This means clients with no credit score(or one score) are allow to get a FHA mortgage with a 20% down payment. They could also refinance their home with a max loan of 80% of their home's value. Here are the requirements:

1. 20% down payment
2. No credit score or one credit score
3. Min 5 months of Mortgage payment in reserves
4. If Self Employed, must be for 3 years.
5. No Gift Funds, all funds must be the borrowers
6. Interest Rate and fees maybe more then a normal FHA loan
7. The credit must be approved and can not be all collections.

Most lenders now require a 640 credit score for FHA loans. Which makes these loan options an amazing program. Also know that I do FHA loans under a 640 score(620 to 639) and under 620(580 to 619). When getting a mortgage make sure you know your options. Even if a bank denies you for a loan, does not mean you can not get approved. Every month I am helping folks into homes when other lenders denied them. Call me today and let's get you approved!!