@Anonymous wrote:
I see a lot of mortgage brokers on here saying that they can find a conventional loan with a 620 score. If that's true what are the compensating factors to this type of a loan (20% down payment, DTI >35%, etc..)? I know it's hard to say as each loan has its own unique qualifiers, but there doesn't seem to be much wiggle room with any score below 680. What am I missing here?
Mortgage insurance on conventinal loans is score sensitive. It is very, very expensive if your score is less than 680. it is inexpensive (in comparison with FHA) if your score is 720 or more. There is a matrix you can google to see the rates available for MI on conventional loans at various LTVs and borrower scores.
Most of the time when we are discussing a 620 score, we are also talking about FHA loans. FHA recently drastically reduced the cost of MI (Jan 26, 2015) and the FHA interest rate is typically lower than conventional when your scores are in this territory.,
