FHA Not accepting anyone below 580 score?

[bott6698]

Ok, I talked to 2 approved FHA lenders today and they both told me FHA just started not accepting anyone below a 580 credit score.

I thought credit scores had nothing to do with FHA loans but I found out today they have changed that policy.

Am I getting bad info here or is this legit?

I should be above 580 mid score by the time the 2 fairly recent collections come off that UPMC insurance paid but still I thought FHA doesn't look at credit score.

Message Edited by bott6698 on 03-24-2008 01:58 PM

[Anonymous]

Thats a bunch of poopie. I've seen people get FHA loans with a 460 credit score..

[sh9730]

Shane or others can explain better, but what is basically happening is that although FHA will INSURE the loans if the FHA approved underwriter verifies it meets all FHA guidelines, but (for now at least) there is NO requirement that any bank make the loan!  SO, due to many factors (my own view is that much of it has to do with the workload piled onto FHA lenders since it is so much more difficult to get "sub-prime" loans) many banks (but not all) are starting to establish lowest FICO scores required. 

So the statement is half true.  Finding a low score loan is still possible, but getting harder as are most loans out there...

[Anonymous]

My husband and I are close friends with a lender at PrimeLending.  He has told us the same thing.  It can be done, but it's getting very difficult.

[bott6698]

geez nothing is` easy anymore....

[Anonymous]

I have heard that this new 580 rule may be coming (actually I think it was 550).  I just heard from a FHA lender that FHA is pushing for this but it is not concrete with all lenders yet. 

[ShanetheMortgageMan]

What you've read above in the replies is true.  More and more lenders are requiring a certain credit score in order to qualify for FHA financing.  The majority of lenders are looking for a 580 score, although there are still lenders offering FHA with 560, 550, 530 and even 500 credit scores.  For someone who doesn't have any established traditional credit, FHA's program that permits non-traditional credit with no credit scores is still available as well.  You want to make sure you speak to a mortgage professional who doesn't just have a few sources for FHA, you want to make sure they have plenty of lenders who do FHA.

[Anonymous]

What you are hearing is basically correct. As of right now there is only one investor  that I am aware of that purchases mortgages on the secondary market that will accept a 580 score and they change at 5:00 PM on 02/27/09. With regard to FHA, there are still no credit score minimums. A credit score minimum with FHA would violate their federal mandate to make mortgages available to as many people as can possibly qualify for them. However, performance has proven that borrowers with a credit score below 620 have a high rate of foreclosure and borrowers below 580 have a significantly higher rate of foreclosure. Therefore, in order to stem the number of foreclosures and therefore prevent a depletion of the FHA insurance fund, FHA has encouraged all investors purchasing FHA insured mortgages on the secondary market to adapt a more restrictive credit policy and they have obliged by changing score requirements  twice in the last 30 days so that they will soon be 620 across the board.