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Many mortgage lenders and banks have recently gone to a minimum score of 640 for FHA loans.  At Schmidt mortgage we are still doing mortgages for clients who have under a 640 credit score.    Obviously, these loans are done on a case by case example.  On these loans an 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 can range from 3 months to as much as 6 months of your mortgage payment.  As an example, if your mortgage payment is $1000 then you would need $3,000 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.  It is usually up to .75% higher then the market rate. 

If your credit score is under 640 and you are looking to buy or refinance your home call me today.  And if your score is under 640, feel free to contact me and let's talk about how we can get your score increased to over 640.  If you have the time to get your credit score up, it will help you get a better mortgage rate. 

For more information on how to your credit score is made up check out: Credit Scores.