Posted by: Wendy Harpp | January 24, 2012

Credit Score Requirements for 2012

I wanted to share with everyone this morning some information you may or may not have concerning credit score requirements for home loans for 2012.

Before we get into that however lets address those of you that may have had a foreclosure, short sale or bankruptcy in the past. If you have had any of these FHA will require that you wait 2 years on a bankruptcy, and 3 years on a short sale or foreclosure before you will be eligible to apply for another FHA loan. That’s good news for all those folks out there that experienced these hardships in 2009 and 2010. You may now be able to get you and your family back into your own home if you have been keeping up with your credit and paying on time to rebuild your scores.

Credit scores range between 300-850. Clearly the higher the score the better!

If your score is below 600 your best course of action is to address the credit issues that are dragging your score down, before you apply for a loan.

FHA loan programs requirements are much lower than conventional lenders. FHA loan programs vary so lets look at what they minimum requirements are.

Most mortgage lender require a minimum score of 640 along with approval by underwriting from an FHA underwriting system order to qualify for FHA financing. If you have a credit score of 640-700 than this is your only option.

There are also a few select FHA lenders that will approve FHA loans for applicants with scores of 600-640. BUT…buyers must be squeaky clean to qualify and still need the underwriting approval.

Home buyers that have a credit score below 600 may still have an opportunity to buy. Getting approval is not easy and the rates will generally be 1/2 to a full percent higher. This program is best for a borrower that has had poor credit history, but has paid their debts and is looking for a fresh start. A borrower that has multiple outstanding unpaid charge-offs is less likely to get approval.



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