@theheater30 wrote:
Hi All! I have a question.. When reading a lot of the posts in the forum, I see that a lot people say that 640 middle score is the magic number in Mortgage lending... How exactly is 640 the magic number? Do they mean by rates? As in you begin to get more competitive rates at that point? Or AUS approval?
I have been doing what I can to educate myself. I know obviously being over 700 is the goal but for those of us hovering in the mid to high 600 range what does this mean?? LOL
Depends on the type of mortgage. Each lender has their minimum mid-score guidelines. However there are thresholds that appear more often than others: some are 620, others are 640, and some are even higher than that. Each lender can make the loan more restrictive, not less, than what Fannie or Freddie or HUD requires.
USDA typically has a 640 mid-score min requirement
FHA: For many lenders they will use a 620 score - but some lender will go much lower. When you get to less than 580 then the down payment increases to 10% rather than 3.5% and other changes to the loan occur. Each lender has their own guidelines.
Conventional loans start at about 620 but you end up paying a higher interest rate and higher PMI rate, if applicable, if you are below 700. Actually if you compare coventional to FHA the breakpoint seems to be at 680, but check with your individual LO. You get the very best interest rates if your score is 740 and up and the best PMI rate if your score is 760 or more.
