WANTED: FHA/VA minimum credit score requirements or score related decline letter

Just received score of 649 with disputes I have found. Looking for a good mortgage comp. that considers this score for good rates. Thanks

A 649 is fine for a home mortgage; it depends what your average score is on all 3 CRs. Most mortgage brokers like to see a score of 620 at least, they will do mortgages with lower scores, but it is usually not at a prime interest rate. As long, as you have not declared BK in the last few years and have a clean payment history for the past 24 months you should have no problem. Decent income and downpayment are also taken into consideration.

Hope this helps.

Dani

It really depends on the TYPE of mortgage. Some mortgages like FHA and VA don't require scores at all, some require 680 or higher.

Whoa, that's not right. HUD uses its own credit scoring model for FHA loans. HUD doesn't use FICO, but that doesn't mean a minimum score is not required--it's just that there is no way to find out what your FHA score is.

I've just wen through all that. If you don't have at least a 600 on your worst score, FHA and VA won't even look at you.

Did that change recently?

I last read FHA underwriting guidelines maybe 1/2 year ago or so - didn't see anything about any scores or minimum requirements.

Does anyone have an URL with some specs?

How about a decline letter to post here? (w/o your name, etc.)

The FHA's score is called TOTAL (Technology Open To All Lenders).
http://www.mbaa.org/present/tech01/fha_scorce.pdf

In December 2000, (in 65 FR 76273, see http://www.greatland.com/newsletters/ComplianceMatters/NewsLetterDetail.asp?NewsID=35&NewsletterID=146 ) HUD rescinded its approval of Fannie's and Freddie's automated underwriting systems and instead made lenders who wanted to do automated underwriting use TOTAL starting March 2001. FHA underwriters do not have to use TOTAL (they can still choose to use manual underwriting like they used to), but the big players use TOTAL.

HUD is now examining the first year and a half of TOTAL results. See http://www.hud.gov/offices/cpo/contract/chi5an33.cfm

Ok, so looking over the slide show it said the number one factor was credit - so I guess the 2 mortgage folks I talked to in early fall were not blowing smoke...

M0ri4rty, I've read all 3 links, didn't find anything about a minimum credit score or any credit scoring requirements.

I don't get it.

Also don't know what Roxi is talking about, maybe it's me!

What I said is that in the slide show it said that the number one factor in getting approved on thier new credit scoring system is CREDIT. So credit still does come into play.

I do these loans everyday. HUD DOES NOT CREDIT SCORE. End of Story.

This is not to say that credit is not a factor as centainly it is. However, there is no minimun score required for a FHA loan.

Underwriters look at the history of the borrower. Is the borrower a total DEADBEAT. Have they never paid a single person in their life. Is everything on their credit report a late pay, collection, charge off and it is clearly obvious that this person can not manage their finances. Or does it appear that the person had an issolated event that cause their problem which is now and has been fixed for a period of time.

Also with FHA loans, the whole package is evaulated. Bad Credit, no Downpayment (its all gift money), no reserves, short job time, large increase in houseing expense, = BAD LOAN.

As for TOTAL. TOTAL is built into the automated U/W engines for FHA loans. In order to get an automated repsonse you MUST have a credit score and generally one close to the 620 # depending on other factors such as reserves, and downpayment. Score in mnid 500's will be approved as well dependign on other factors.

However, MANY FHA loans are still underwritten manually so it's all just gotta make sense.

.... from wells fargo, dated dec. 20, 2000. it cites my credit score as the sole reason for declining my application to refinance my primarary residence at 68% LTV, rate and term, with no cash out. get back to me with your contact information, and if you can use this to alleviate the suffering and grief FICO and its profiteers are using against us little consumer ants, i'd be happy to share it with you. read my posts throughout this forum. my credit is perfect, but that doesn't mean that FICO's quackware will ever give me a score acceptable to lenders. this isn't FHA/VA related-- i live in an area where their dollar limits don't buy much more than a deeded parking space.

Doug, FNMA has NOTHING to do with FHA.

And, Doug, FYI, posted an article on FNMA at the CreditCourt forum at http://forum.creditcourt.com/discus/messages/15/15.html

From http://fhatoday.com/rates.htm

Amount of adjustment added to the rate

Loan amount < $150,000 .250%

Credit score < 620 .125%

Credit score < 575 .250%

Bankruptcy/CCCS .250%

Non-occupying Co-borrower .125%

Open collection accounts .125%

I don't know if the "open collection accounts" rate adjustment is for collection open at the time of application or collections that remain unpaid.

I just called to get some more details:

These rate increases are NOT FHA required, it's just this particular lender's pricing.

Here's the deal:

Because FHA does NOT require these add-ons, it looks to me that this particular lender simply makes a few extra bucks on loans for people with bad credit.

Here is the pricing from the same URL:

30 Year Fixed 6.500 APR 7.340 Points: 0.000

30 Year Fixed 6.250 APR 7.190 Points: 1.000

So the difference in pricing for that .25% rate increase is 1 point.

That means they pocket an extra $2,000 if your loan amount is $200,000 - all because your score is below 575.

If your score is below 620, they make an extra $1,000.

And I asked about the collections too - if you have an unpaid collection at the time of application, the 1/8% rate increase applies even if you pay it off before closing. So, that's another $1,000 for them.

Real odd - I've never seen anything like that. And it should be illegal.