Mortgage Loan Qualification Tighten

Minimum Credit Score, Down Payment, Reserve Requirements Increase

Sep 14, 2009

Home buyers are feeling the pinch once again. Mortgage lenders are increasing mortgage guideline requirements in an effort to stabilize themselves in the industry.

The first casualties of the market bust are beginning to immerge and are ready to get their lives back in order. For many this will include re-establishing credit and setting sites on a new car or home to replace what was lost. Ever changing mortgage guidelines are making this task more challenging than previously thought. Even first time home buyers with good credit (650 to 690) are finding it difficult to obtain financing.

Less than two years ago, many mortgage lenders did not have a minimum credit score requirement for FHA loans. Today all that has changed. A mere six months ago the required middle score of 550 began creeping into the picture and today a minimum score of 620 is pretty much standard across the board.

I have bad credit, can I get a mortgage loan?

There is still hope out there for those who do not have a high credit score but do have documented income and documented alternative lines of credit. According to Scott Lambert* of the US Bank Home Mortgage Division, US Bank is currently offering a ‘No Minimum Credit Score requirement on our FHA/VA Programs’. But these may be disappearing in the near future. Their competition has begun to raise the bar even higher. SunTrust Mortgage Minimum Credit Score Guidelines** published 9/4/09 has begun requiring a middle score of 660.

What is the best mortgage loan if I am rebuilding my credit?

Today the guidelines for FHA loans are more stringent than they have been in the past, but are still the preferred path for those with less than perfect credit and the ideal route for those recovering from bankruptcy. Alternative lines of credit can be used to establish or re-establish credit worthiness, where tougher conventional loans do not.

FHA Mortgage Loan Requirments

Conventional Mortgage Loan Requirements

How can I make my home purchase and mortgage closing go smoothly?

Seasoned mortgage and real estate professionals are your best source for information throughout this process. Working with an industry professional early in the process can save many hours and much needless frustration. These professionals receive constant training on the latest rule and guideline changes, correct FHA/VA loan limits and special programs buyers may qualify for.

Some of the more specialized experts in the field also help navigate credit reports and scoring to maximize a buyers’ credit rating. By assisting purchasers in increasing their credit score they ensure qualification and reaching their target interest rate. Being an informed consumer with industry professionals to guide and support make it possible for anyone hit by a financial blow to get their life back on track quickly and easily.

* http://www.mortgagebrokerland.com/forums/f3/sub-620-no-fico-no-minimum-credit-score-fha-loan-7756/

The copyright of the article Mortgage Loan Qualification Tighten in Buying/Selling a Home is owned by Katrina Rief-Derrico. Permission to republish Mortgage Loan Qualification Tighten in print or online must be granted by the author in writing.

Sep 26, 2009 7:49 PM

Guest :

Good Information. Thanks. Liz Z

Sep 26, 2009 8:19 PM

Guest :

You have an awesome page here..the article on mortgage loan qualifications is very clear and also interesting. Thank you for sending it to me..maryladd

Sep 26, 2009 9:48 PM

Guest :

A conventional mortgage is the safest bet and I believe is available for anyone...as long as they wait until they have a large enough down payment. In our world of instant gratification...no one wants to wait...it is now, now, now...but waiting and getting into something that a person, people or a family can afford is key. Now, if only it was truly that simple for everyone in this economy.
Great article.

Sep 27, 2009 1:51 PM

Guest :

This is an important subject to write on. I wish the best for everyone on buying a house.

Sep 27, 2009 1:56 PM

Guest :

Thanks for posting this article on loan qualifications. I was surprised to learn that conventional loans do not ..."establish or re-establish credit worthiness...."

Sep 27, 2009 2:07 PM

Katrina Rief-Derrico :

Greetings everyone! Thank you for the feed back -

To clarify - After bankruptcy when a person doesn't have any good credit or when a person is just starting out and does not have enough credit, the use of alternative credit lines such as utility and cell phone bills can be used as means to establish or re-establish a person's credit worthiness. FHA Mortgage Loans will allow the use of alternative credit lines where Conventional Mortgage Loans will not. Qualification for a Conventional Mortgage Loan would require trade lines (usually 4 or more) such as a Visa/MasterCard Credit Card, Department Store Credit Card and/or automobile loan with a good history to be able to qualify.